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Oil prices fell below $50 a barrel today for the first time since May 2005, reflecting declining demand as the global economy slows - London-traded Brent crude fell $3.10 to $48.62 a barrel, while US light sweet crude was down $3.71 to $49.91.
The latest fall means oil is the cheapest it has been for over three years, and defies predictions earlier this year from some leading producers who said it could peak at $200 a barrel.
In May this year, Libya's leading oil official Shokri Ghanem said: "It is out of our hands. $200 a barrel is not logical but even $135 is not logical, so yes oil could reach $200 a barrel. Why not?"
The average price of oil for the year to date was $107.72. It peaked at $147.25 a barrel in July this year, well over twice the level it was at in the same month in 2007.
The decline in the value of oil is good news for motorists and consumers. The price of petrol is likely to fall and utility bills will also come down if the price remains low, although some energy companies have been criticised for failing to pass on price cuts to their customers quickly enough.
Energy minister Ed Miliband met leading suppliers earlier this week to demand they lowered their prices. The fall is also likely to reduce inflationary pressure and makes another big interest rate cut more likely. The Bank of England's monetary policy committee next meets to set the rate on December 4.
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