Oil hits new seven-year low on glut warning

The oil price has fallen to a new seven-year low after the International Energy Agency (IEA) forecast a slowdown in growth in demand for oil.

The price of Brent crude oil fell below $39 a barrel at one point, its lowest since December 2008.

The IEA said demand in the current quarter was growing by 1.3 million barrels a day, down from 2.2 million barrels in the previous quarter.

The IEA predicts that will slip back to 1.2 million barrels a day next year.

The price of Brent crude fell to $38.90 a barrel at one point, before recovering slightly to $39.13 - still down 60 cents in the trading session. US crude oil also fell, down 50 cents to $36.12 a barrel.

Oil prices are down more than 10% over the week. The trigger was a meeting of oil producers' cartel Opec late last week, which broke up in disarray as the member countries failed to agree to put a lid on production.

Shale oil

Opec producers pumped more oil in November than in any month since late 2008, almost 32 million barrels per day. That comes at a time when the world's economic growth is slowing, blunting demand for raw materials.

The IEA said that although consumption was likely to have peaked in the third quarter, demand growth of 1.2 million barrels a day was still healthy.

Earlier this week, the US Energy Information Administration forecast that US shale oil production, now a major source of oil supply, would fall in January for the ninth month in a row.

Sustained falls in output could help to stabilise the price of oil, although some market forecasters suggest the price could continue to fall to as low as $20 a barrel.