Oil continues downtrend, making 2014 worst year since 2008 when prices were below $35 a barrel.
Currently, Oil is trading at $53.42 a barrel, slipping fourth time in the past five days.
MT4 GRAPH: OIL
U.S oil output this year has been the largest in the past three decades and OPEC refused to cut production as a result oil prices showed more than 45% decline this year. OPEC, which pumps more than a third of the world’s oil, has cut output in response to lower prices during the 2008 financial crisis. However, at the cartel’s meeting in Vienna last month, it was decided to hold output steady at 30m barrels a day, sending oil prices into a plunge.
Oil slump had major impact on the global markets. USD showed best annual gain since at least 2004 and destroyed energy-producing nations such as Russia and Venezuela. The Russian ruble had its steepest annual retreat since 1998. Both Russia and Venezuela are forced to revise their investment plans and look for ways to reduce costs.
Oil is dropping on the market’s fear of global oversupply. Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut quoted by Reuters saying that “every time the market tries to pick itself up, it’s just another wave of selling.”
Meanwhile, oil tanks at el-Sidr, Libya have been on fire for days after a rocket hit one of them. Two days’ worth of Libyan oil production has been destroyed, officials reported on Sunday. Libya has already asked to send firefighters from Italy, Germany and the United States to help control the fires. However, hopes that oil prices will go up did not materialize.
Saudi Arabia, the OPEC de facto leader, said it will not cut production regardless of price levels, even if oil drops to $40, $30 or $20 per barrel, a policy shift that will definitely have far-reaching implications for the global energy industry.
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