Oil continues on a downtrend amid lacklustre demand and supply glut

05-Jan-15

Oil on the Nymex and Brent futures dropped to fresh 5-1/2 year lows amid concerns of a global supply glut amid weak demand, as per Reuters. The two oil benchmarks, Brent and West Texas Intermediate, have now lost more than half of their value from peaks hit in mid-2014. OPEC's decision in November to maintain output had earlier accelerated oil's losses, while record-high Russian production and the highest Iraqi exports since 1980 added to the concerns about oversupply. Lacklustre economic data from the United States on Friday fuelled worries about the state of the global economy and the strength of oil demand. A weak euro may also have contributed to further oil losses as it reduces the purchasing power of euro holders for dollar-denominated oil. A weaker euro puts downward pressure on Brent.