Falling oil prices (revisited)

In parallel with the World's stock markets oil prices continue to slide with UK's Brent crude falling to just over $40/barrel. This is very much a reflection of the strong expectation that the global economy will remain depressed for many months ahead. Any hopes of a speedy recovery have been firmly rebuffed by a series of gloomy economic and corporate stories unveiled this week. The message is now clear that demand for oil will remain weak for the foreseeable future. In response OPEC is desperately trying to reduce the supply of crude oil. Indeed the oil producers' cartel has already acted to reduce production by millions of barrels a day in a vain attempt to underpin prices. However, it is becoming clear that the action taken so far will not be enough to halt the slide. We can expect OPEC to act soon to make further reductions in production levels at their next meeting which takes place on the 15 March.