Oil prices slump to new four-year low below $80 a barrel mark

Petrol prices have fallen more than 8p to 123.1p a litre since their June high

Petrol prices have fallen more than 8p to 123.1p, but as oil is priced in dollars UK drivers are yet to feel the full benefit (Getty Images)

The price of oil has plunged to a new, four-year low below the $80 a barrel mark as new forecasts of sliding global demand heralded better news for motorists at the petrol pump.

Brent crude for December delivery dropped 83 cents to $79.55 — the lowest since September 2010 — as dealers sold out on a toxic cocktail of news for prices.

Oil cartel OPEC — which accounts for nearly half the market — said demand for its oil will drop to 29.2 million barrels a day next year — almost 1 million barrels fewer than it currently produces.

Saudi Arabia has meanwhile so far refused to cut production in response to a 30 per cent slump in crude prices since June.

A US fracking boom is adding to the supply glut while doubts grow over the economic health of China, the world’s biggest energy consumer.

Petrol prices have fallen more than 8p to 123.1p a litre since their June high, but as oil is priced in dollars UK drivers are yet to feel the full benefit. The pound has dropped from highs near $1.72 to $1.58 since the summer as expectations of an early rise in interest rates fade.

An AA spokesman said: “Things have improved but the weaker pound is deadening the impact for drivers. It could be even better.”

The oil price is one of the chief factors behind the Bank of England slashing its inflation forecast to 1 per cent this week.

Commerzbank analyst Carsten Fritsch said: “I think oil will test lower levels. A decisive fall below $80 for Brent is possible.”