Oil prices fell after the US Senate rejected a $14bn bail-out plan for the carmakers’ sector, a move that weighed heavily on sentiment towards commodities.

Nymex January West Texas Intermediate fell $1.70 to $46.28 a barrel, but gained 13.4 per cent over the week, while ICE January Brent lost $0.98 to $46.41 a barrel, rising 16.8 per cent this week.

Crude prices rose over the week on mounting expectations that Opec could announce a big production cut of at least 1m to 1.5m barrels a day at the oil producer group’s meeting next Wednesday. Comments from Russia’s president indicating that he was willing to work with Opec on possible supply cuts also helped to bolster crude prices.

However, the rapidly weakening outlook for oil demand was underlined by the latest update from the Energy Information Administration, released on Tuesday. The statistical arm of the US Department of Energy said that, for the first time in three decades, global demand for crude oil was set for a decline in two consecutive years in 2008 and 2009. Harry Tchilinguirian, senior oil market analyst at BNP Paribas, cautioned that an overly aggressive production cut by Opec might simply be deemed unfeasible by the market.

“Achieving a price floor rather than pushing for higher prices in the current economic climate seems a more realistic goal,” said Mr Tchilinguirian. BNP cut its 2009 average price forecast for WTI from $75 a barrel to $53, warning there could be more downward pressure on oil if January brought more weak economic data and further deleveraging by hedge funds.