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

The price of oil remains weak, at just under $49 a barrel, amid Opec warnings of falling demand and reports of high inventories.

US light crude was down 42 cents at $48.99 a barrel, after three days of falls. Brent oil fell 54 cents to $51.42 a barrel.

The oil producers' cartel said demand was shrinking faster than expected.

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

Prices dropped below $40 a barrel late last year.

Demand drag

Crude stocks reached 366.7 million barrels in the US, according to government data, the highest total since September 1990.

At the same time, Opec forecast that demand would drop by 1.37 million barrels per day this year - greater than the 1.01 million barrels per day originally forecast - to average 84.2 million.

"In the coming months, the market is expected to remain under pressure from uncertainties in the economic outlook, demand deterioration and the substantial overhang in supply," Opec said.

Retail sales dropped 1.1% in March in the US, according to a government report released on Tuesday, renewing fears of a slowdown in demand.

"Crude fell on the back of weaker-than-expected March retail sales, which also dragged on equities, and the main worry is still the large weekly increase in crude inventories," said Peter McGuire, managing director of Commodity Warrants Australia.

There is as yet little sign that demand is picking up, said Ben Westmore, energy analyst with National Australia Bank. "Demand will have to come back before you see the oil price move up from $50 in a sustained way," he added.

Last week, the International Energy Agency predicted that the global recession would cut demand for crude this year, with world oil demand falling by 2.4 million barrels a day to 83.4 million barrels.

Separately, Mexico's state-owned oil company Pemex has unveiled plans to built its first new refinery in 30 years. The $9.1bn (£6.1bn) refinery is expected to come online in 2015.

Even though Mexico is the world's sixth-biggest oil producer, it relies on US refineries to process a lot of its crude.