Oil tumbles over economy fears

Oil has fallen to below $56 a barrel amid more gloomy news on the global economy and a lack of action from the G20 over the weekend.

US light crude for December fell $1.44, or 2.5 per cent, to a low of $55.60 a barrel before recovering slightly to around $56.45 by 09:40 GMT.

London Brent crude dropped one per cent to $50.48.

News Japan has joined Germany and Italy in recession helped push the price of oil down, as did a vague promise of cooperation after a weekend meeting between leaders from the top 20 world economies.

In addition, the Organisation of Petroleum Exporting Countries (Opec) seemed to suggest production would not be cut at their emergency meeting later this month.

Despite calls from Iran for a production cut, Opec's president Chakib Khelil has downplayed the likelihood of any change, which would boost oil prices.

Although governments agreed on Saturday at the G20 summit to several measures to improve the financial situation, it was left to individual nations to decide how best to implement them.

The meeting did little to reassure investors and oil prices, as well as stock markets in Europe, were lower this morning as a result.