Oil set for biggest fall since 2008

Oil fell below $56 (€46.15) a barrel yesterday and was heading for its biggest annual decline since 2008, pressured by weakening demand and a supply glut prompted by the US shale boom and Opec’s refusal to cut output.

The price of global benchmark Brent crude has nearly halved in 2014 as demand growth slowed, the US expanded output and Opec, dropping its strategy of trimming supply to keep oil around $100 a barrel, chose instead to defend market share.

Yesterday, prices came under further pressure from a survey showing China’s factory sector shrank for the first time in seven months in December — a bearish indication on the strength of oil demand in the world’s second-largest consumer.