Slump in US demand for petrol sends oil price below $22

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Demand for petrol and fuel slumped in the United States as the nation's transport system ground to a halt in the wake of the terrorist attacks, it emerged yesterday.

The fall-off fed through to a sharp rise in oil stocks, which in turn triggered another drop in the price of crude oil.

The US Energy Information Administration said demand for petrol and other refined products averaged 19 million barrels a day in September, a 4.6 per cent fall from the same time a year ago.

Traders had expected a drastic slowdown in air travel since the 11 September terror attacks on the United States to swell stocks of distillate, which includes heating oil and diesel fuel.

There are now 307.5 million barrels of crude in storage in the United States, excluding the Strategic Petroleum Reserve, according to EIA calculations.

Crude oil for November delivery fell by as much as $1.07, or 4.7 per cent, to $21.72 a barrel in New York, taking the fall since the events of 11 September to 21 per cent.

The oil price is now well below the $22 lower limit that should force the Organisation of Petroleum Exporting Countries, to cut output in order to boost prices.

The cartel last month decided against such a move for fear of triggering a recession, but yesterday Ali Rodriguez, Opec's secretary-general, said ministers were debating a cut in production.