Oil traders returned to work in New York on Tuesday after the Labor Day weekend in strange, if not wondrous circumstances. The price of the benchmark West Texas Intermediate crude oil contract was actually lower than it had been 12 months earlier. It was the first time this had been so in two and a half years, since oil prices embarked on their sustained rally in March 2004.

This reverse in the oil price trend received little attention, for the reason that it must carry health warnings. The 12-month comparison showed a reduction in WTI thanks only to the anniversary of the sharp spike in oil prices that followed Hurricane Katrina, which disrupted supply in the US. Brent Crude, the benchmark European contract, was not affected in the same way by Katrina, and did not show a year-on-year decline. WTI was only 0.4 per cent down year on year at the close of last week, and even though it continued to fall on Tuesday, it looked almost certain to close above its level of a year earlier. The phenomenon was short-lived.