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Oil falls to 5-year low of May 26, 2009 level at US$58 as OPEC remains divided

Oil falls to 5-year low of May 26, 2009 level at US$58 as OPEC remains divided

NEW YORK: Price of Brent oil fell to five-year lows this week, as markets were hit by shrinking Chinese manufacturing output .

Oil has now halved in value since June, due also to a stronger US dollar and weak demand as the global economy struggles. Investors watched the situation in crude producer Russia, as the ruble crashed to a series of record lows, despite a drastic interest rate hike.

“Lower output from China means less of a need for oil, while as a primary oil producer Russia really feels the pain of lower oil prices, compounded by the sanctions imposed earlier this year [over the Ukraine crisis],” ETX Capital analyst Daniel Sugarman said. Many commodities fell in line with oil and sentiment was subdued on Friday with many traders away for an the holidays.

OIL: Brent prices on Tuesday plunged to US$58.50 — a low last seen on May 26, 2009 — and New York crude hit a similar low at US$53.60 after OPEC signaled it has no plans to intervene to shore up plunging prices. Brent had already breached the psychological US$60 barrier earlier on Tuesday as weak Chinese manufacturing data stoked global demand concerns.

However, the market rebounded on Friday, in line with gains on global stock markets, as investors snapped up bargain crude. The latest selloffs came after OPEC opted last month to maintain its collective output ceiling at 30 million barrels per day, where it has stood for three years.

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in February sank to US$60.69 per barrel compared with the US$62.11 for next month’s contract recorded one week earlier. On the New York Mercantile Exchange, West Texas Intermediate, or light sweet crude, for next month dove to US$56.23 per barrel from US$58.15 a week earlier.