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Brent oil price falls below $59 a barrel | |
(about 3 hours later) | |
The price of Brent crude oil has fallen below $59 a barrel for the first time since May 2009. | |
After dropping below $60, the Brent price then fell to $58.50 a barrel, before recovering slightly to $58.94. | |
Oil prices have now nearly halved since June as a result of waning demand and increased supplies. | Oil prices have now nearly halved since June as a result of waning demand and increased supplies. |
The latest fall was triggered by news of a fall in industrial activity in China, the world's second largest consumer of oil. | |
The price of US crude fell by $1.73 to $54.18 a barrel. | |
At the weekend, the head of Opec reiterated that the oil cartel would not try to shore up the oil price by reducing production. | At the weekend, the head of Opec reiterated that the oil cartel would not try to shore up the oil price by reducing production. |
The comments came a couple of days after the International Energy Agency cut its oil demand forecast for 2015. | The comments came a couple of days after the International Energy Agency cut its oil demand forecast for 2015. |
Rouble rout | |
While lower oil prices could provide a boost to many economies through cheaper fuel, the sharp drop in the cost of crude is affecting many oil producers. | |
On Tuesday, Russia dramatically increased its interest rate from 10.5% to 17% in an attempt to halt the slide in the country's currency, the rouble. | |
The rouble has lost 50% against the US dollar this year as falling oil prices and Western sanctions continue to weigh on the country's economy. | The rouble has lost 50% against the US dollar this year as falling oil prices and Western sanctions continue to weigh on the country's economy. |
However, early signs were that the attempt to defend the currency had failed, with the rouble hitting fresh lows against the dollar. | |
Investment hit? | |
With high levels of output from the US and no sign of a sustained economic recovery in Europe, most experts believe prices will remain low for the foreseeable future. | |
However, the low cost of crude may also make investment in some new wells uneconomical - which means prices could rise in the longer term. | |
Goldman Sachs has estimated that about $930m of investment in new oil projects could be hit, given the recent plunge in oil prices. | |
Without this investment, new oil output could be cut by about 7.5 million barrels a day by 2025, or about 8% of current demand, the bank estimates. |