Brent Crude Oil Price Below $40 A Barrel

The cost of Brent crude oil is nearing seven-year lows, falling below $40 a barrel, as stockpiles continue to grow worldwide with no sign of production cuts in sight.

The latest retreat on price began on Friday as the OPEC cartel of nations, which provide a third of the world's oil, confirmed it would be maintaining output to protect its market share from the challenge posed by US shale oil.

It had been under pressure from its poorer members to cut production in support of raising prices.

OPEC indicated it could be June before it revisited the issue again.

The cost fell below $41 on Monday before falling further on Tuesday as analysts continued to speculate that prices could enter freefall in the current climate, going as low as $20 a barrel, given the supply glut, record stockpiles, weak demand and strong dollar.

A note by Goldman Sachs said: "The rising probability that markets may need to adjust through 'operational stress', when surpluses breach capacity, leaves risks to our forecast as skewed to the downside in coming months, with cash costs near $20 per barrel."

London-traded North Sea Brent was trading at $39.8 at one stage on Tuesday.

The price weakness has been welcome for consumers and non-oil businesses as lower fuel costs have helped keep a lid on inflation - with supermarkets announcing a new round of price cuts at the pumps on Tuesday.

A recent report by the RAC suggested the UK was likely to be only months away from £1 a litre at the pumps.

Its rival, the AA, suggested motorists should already be benefiting from that landmark price for the first time since 2009.

It claimed refineries were protecting their margins.

But the effects on energy and commodities firms have been devastating - hitting investment and jobs - with Anglo American the latest to announce a dramatic scaling-back in its future plans to help it account for the collapse in prices.

Brent crude had been trading above $110 a barrel in August 2014 but the flood of cheaper US oil combined with the emerging market slowdown to result in the glut.

A report by the International Energy Agency last month identified a record world stockpile of oil, amounting to three billion barrels, with tankers being used to hoard supplies off-shore.

It highlighted efforts by poorer oil-producing nations to protect their income from weak prices by raising production - making the over-supply issue worse.

It said that Russia's output was at a post-Soviet record.