Oil price hits 11 year low on global oversupply & lower heating oil demand

By FXStreet FXStreet (Mumbai) – Brent oil price hit an eleven year low yesterday as prices fell 2 per cent and dropped to $36.05, the weakest price registered since July 2004. It even stayed below the financial crisis low of $36.20 reached on December 24 2008. It finished the day at $36.35, down 1.4 per cent. The price of US crude on the other hand dropped 40 cents to $34.17 a barrel, its lowest since 2009. Global oversupply coupled with fall in demand for heating oil on warmer-than-normal temperatures led to the sharp fall in prices yesterday.

The global oil glut has weighed on prices ever since the OPEC abandoned its policy of price control and replaced it with Saudi Arabia championed market share strategy. The OPEC at its December 6th meeting held in Vienna chose to disregard the supply side concerns and maintained its policy of pumping near-record volumes of oil further adding to the already existing glut that has caused oil price to slum. The group decided to increase its collective output ceiling to 31.5 million barrels per day (bpd) from the previous 30 million. Oil prices had fared well before OPEC’s new policy got initiated. In June 2014, the price …read more

Source:: FX Street