Oil prices fell through the $54 a barrel mark this afternoon, hitting a five-and-a-half year low, as the worldwide slump showed no signs of abating.
Brent crude plummeted by more than 5 per cent to $53.16 in the first proper day of trading in 2015, dragged down by stock markets on both sides of the Atlantic.
Wall Street opened down as companies exposed to oil traded lower. Meanwhile in Europe, equities extended the session’s losses with the FTSE 100 losing almost 2 per cent, or 130 points, led by Weir Group, the Glasgow-based engineering group that makes pumps for the US shale industry.
BP was down close to 5 per cent at 390.50p in London trading, while Royal Dutch Shell fell more than 3.5 per cent at £20.90.
Falling oil prices have left some investors nursing losses, but have been welcomed by motoring and consumer groups.
The RAC said last month that it was optimistic petrol prices could fall below £1 a litre for the first time since May 2009 amid a supermarket price war.
This afternoon, Tesco trimmed 2p off petrol and diesel prices across its 500 filling stations. The same cut will come into force tomorrow at Sainsbury’s 298 forecourts.
Oil has sunk from highs of $115 a barrel last summer due to a glut fuelled by America’s shale boom and Opec’s refusal to cut production.
Analysts have been lowering their outlook for prices. Citi yesterday trimmed its average price to $63 a barrel this year and $70 in 2016, while Bernstein today said prices would average $80 and $90, respectively.
Led by Saudi Arabia, Opec has refused to twitch over the collapse in prices. Bijan Zanganeh, Iran’s oil minister, today said prices would be between $60 and $90 this year, according to the ministry’s official website.
The continued sell-off in oil sent traders running towards safe havens. Gold rose more than one per cent to $1,201.30 an ounce, pushed higher also by concerns over political uncertainty in Greece ahead of a crunch election later this month which could lead to the country’s exit from the eurozone.
The Times
