Oil prices tumbled below $50 a barrel today for the first time in three and a half years as the slowdown in the global economy dragged down demand for fuel.

US crude fell $3.63 to $49.99 a barrel while the price of London Brent declined to $48.45 — its lowest level since May 2005 and 67 per cent below the all-time record of $147.27 a barrel reached in July.

Last month, Opec, the cartel of oil producing nations responsible for 40 per cent of global output, cut supplies by 1.5 million barrels a day to support the price of crude.

However, prices have continued to fall and while Opec is unlikely to reduce supplies when it meets at the end of this month, it is likely output will be reduced when the cartel convenes in Algeria in December.

Yesterday, Deutsche Bank predicted that the oil price could fall as low as $40 a barrel in 2009.

The further slide in the oil price today reinforced signs of waning demand for fuel as the economic downturn intensifies. Oil companies are planning to store millions of barrels until demand returns.

Shipping brokers told Reuters that Shell and Koch, the American oil trader, had reserved a number of supertankers, each with a 10 million barrel capacity — more than the daily output of Saudi Arabia, the world's leading producer — to store crude.

Since prices have fallen, Britain's largest supermarkets have passed on the falling cost of petrol to its customers. However, households are yet to benefit from lower energy bills, despite calls from Alistair Darling, the Chancellor, to pass on lower costs.

Last month, Shell reported profits up 71 per cent rise in profits to $10.9 billion (£7.3 billion) following a 148 per cent increase reported by its rival, BP.

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