Crude drops below $120 a barrel

The price of crude has fallen below $120 a barrrel for the first time in three months, amid speculation that the world financial crisis will reduce demand for oil. Earlier this summer the price soared to unprecedented highs of $147 per barrel. Today's three per cent drop in price was partly triggered by figures yesterday showing the sharpest increase in US consumer inflation for three years.

The head of oil research at Societe Generale, Mike Wittner, said: "US demand won't recover soon. Chinese demand keeps growing, but at a slower pace."