US light crude fell 91 cents to $90.99 a barrel, after dropping $2.30 on Tuesday.

Fears of a US recession have increased after a number of top companies missed analysts' profit forecasts and data has shown weakening consumer demand.

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In past weeks, the cost of crude has surged to record levels, breaking through the $100-mark for the first time.

However, a number of analysts and oil industry experts have said that the increases in price are down to speculative buying and geo-political fears rather than a shortage of crude.

Opec Secretary-General Abdullah al-Badri said on Wednesday that: "I think there is a disconnect...between price and fundamentals. The market is really influenced by other factors."

He added that the oil producers group Opec would "not be hesitant to increase production if fundamentals justify that".

The IEA said in its monthly report on Wednesday that demand for crude oil in 2008 will be 87.8m barrel per day, which represents a 2.3% rise from 2007 levels and is slightly lower than previous estimates.

It said that rising demand in China, falling oil stocks, and tensions in the oil-rich Middle East and Nigeria remain "important supportive factors" for oil prices.

Opec is due to meet on 1 February to discuss output levels, and there are already some calls for production to be boosted.

US President George Bush called on Opec to consider the wider implications of near record oil prices and the impact that they would have on the global economy.

If "one of the biggest consumers' economy suffers it means less purchases, less oil and gas sold," President Bush said.

(BBC)

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