Oil dropped to a new five-and-a-half-year low on Monday with the price slump set to continue into the new year, Reuters has reported.
February Brent, one of the oil price benchmarks, traded at $55.36 a barrel, before edging back to $55.42- the lowest since May 2009.
Meanwhile, US crude fell even further to $51.40 a barrel but picked slightly up to $51.59 a barrel, still down $1.10.
The two oil benchmarks, Brent and West Texas Intermediate, have now lost more than half of their value from peaks hit in the middle of last year, when it was well above the $100.
The Organsiation of Petroleum Exporting Countries (OPEC) decided in November to maintain output unchanged as global demand remained low.
Iraq’s crude exports in December last year were the highest in more than three decades, which added to concerns about oversupply according to Reuters.
“Oil demand is unlikely to be robust this year when we look at the state of economies in China, Japan and Europe,” said Yusuke Seta, a commodity sales manager at Newedge Japan.
The euro fell to a nine-year low today triggering more concern over a slacking global demand.
“Theoretically speaking, a weaker euro puts downward pressure on Brent” because it reduces the purchasing power of euro holders for dollar-denominated oil, according to Seta.
OPEC producers’ output has been reduced to around 380,000 barrels a day due to recent instability in Libya, which is a major oil producer in the cartel, state-run National Oil Corp (NOC) has said.
