Supply Drives Oil to Five Year Low

Oil prices dropped to fresh 5-1/2-year lows on Monday on worries about a surplus of global supplies and lackluster demand.

Russia’s oil output hit a post-Soviet high last year, averaging 10.58 million barrels per day (bpd), up 0.7 percent thanks to small non-state producers, Energy Ministry data showed.

Iraq’s oil exports were at their highest since 1980 in December, an oil ministry spokesman said, with record sales from the country’s southern terminals.

 
But oil producer group OPEC has decided not to cut output, opting to let the market find its own level.

The two crude oil benchmarks – Brent and U.S. light crude, also known as West Texas Intermediate – have now lost more than half of their value since mid-2014.

Brent crude LCOc1 for February dropped as low as $54.85 a barrel, its weakest since May 2009, before edging back to $54.90, down $1.52, by 1155 GMT (0655 ET). U.S. crude CLc1 slid to $51.36 a barrel on Monday, also its lowest since May 2009.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza