US Oil Falls Below $50 For First Time since 2009

January 5, 2015 Share Print 0

The US oil price has fallen below the symbolic threshold of $50 a barrel for the first time since April 2009.

The price of Brent crude also fell on Monday, dipping more than 6% to trade at below $53 a barrel.

The price of both Brent crude and US oil, known as West Texas Intermediate crude, have now lost more than half of their value since mid-2014.

Investors are worried that combination of a global supply glut and weak demand could cause prices to tumble further.

US oil production has soared recently, as fracking – or the process of extracting oil from shale rock by injecting fluids into the ground – has revolutionised oil production in the country, transforming US states such as North Dakota and Pennsylvania in the process.

However, the increase in production has come just as economies across the world – from Europe to China – have slowed their once voracious demand for oil.

This, combined with Opec’s decision to continue extracting oil at its current pace, has left many investors worried.

That has in turn led shares of many of the world’s leading energy firms, from BP to Exxon Mobil, to decline sharply over the past few months.

via BBC

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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.