The price of oil is well below last year's peak levels

The price of oil has fallen after the International Energy Agency predicted that the global recession would cut demand for crude this year.

The IEA said on Friday that world oil demand would fall by 2.4 million barrels a day to 83.4 million barrels.

US light crude settled $2.19 lower at to $50.05 a barrel. Brent oil settled $1.92 lower in London at $52.14.

Oil prices have slumped since hitting a record high of more than $147 a barrel in July last year.

'Demand destruction'

The Paris-based IEA said its forecast of lower oil demand was influenced by "a growing consensus that economic and oil demand recovery will be deferred to 2010".

It also noted that developed countries' oil inventories had risen in February to 61.6 days of forward cover, the highest since 1993.

Victor Shum, an analyst in Singapore with the Pervin & Gertz consultancy, said the IEA's lower forecast represented "very serious demand destruction".

"The macroeconomics don't look good at all for this year," he added.

The price of oil dropped below $40 a barrel at the end of 2008 before recovering slightly, but remains nearly $100 below peak levels.