30th December 2014
Brent crude oil briefly fell to a five-and-a-half-year low today at below $57 per barrel as investors wagered that the worldwide surplus would persist well into 2015.
The benchmark recovered some ground later but has fallen more than 45% since June and looks to be heading for its worst year since 2008, while oil traded in the US is set to fall through the $50 per barrel level, according to the Telegraph.
Oil has been heavily oversupplied this year due to growth in output from US shale, lower consumption and competition from alternative fuels.
Crude prices have plunged since November when the Organisation of Petroleum Exporting Countries (Opec) agreed to keep production quotas unchanged, which resulted in a price war with producers outside the Middle East-focussed group.
Opec countries led by Saudi Arabia produce a third of the world’s crude.
The unrest in Libya, another key Opec member, has closed ports and reduced the country’s oil exports to almost nothing, but this has not been enough to stabilise prices.
In the FTSE this morning, energy stocks were the biggest losers .
Royal Dutch Shell A and B shares were down 2.7% and 2.4% respectively.
BG Group fell 2.7% and Tullow Oil dropped 2.3%.