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Oil price slides to 5yr low in Australia on worries about supply glut

Oil price slides to 5yr low in Australia on worries about supply glut

CANBERRA: Oil prices in Australia have slumped to fresh five-year lows on worries about a supply glut, helping push down markets in the US and Europe. Santos shares were down 60 cents, or 7.23 per cent, at $7.70.The Australian share market has closed 1.6 per cent lower, as a sharp drop in oil prices pulled back energy stocks, and resources stocks weakened. Woodside Petroleum lost $1.01 at $34.38, and Oil Search slid 56 cents to $7.29.National turnover was 1.42 billion securities worth $5.04 billion.

Global miner BHP Billiton descended $1.22 to $28.88, Rio Tinto dropped $1.63 to $55.50, and Fortescue retreated 11 cents to $2.55.OptionsXpress market analyst Ben Le Brun said the fall in the oil price was the main factor dragging back the Australian market on Tuesday.

It (the lower oil price) should ultimately be a stimulus for the world economy, but it’s really undermining confidence,” he said.Mr Le Brun said Chinese economic data later in the week may be a catalyst for a change in sentiment.He said the market in Shanghai was trading higher, which suggested that Chinese investors were seeing something that no one in the resources sector in Australia was seeing, such as the potential for the Chinese government to increase further economic stimulus measures.

Energy giant Santos slumped to its lowest level in 10 years following the slide in oil prices, plus a credit rating downgrade from Standard and Poor’s.Among the big banks, ANZ weakened 52 cents to $31.88, National Australia Bank sagged 37 cents to $32.60, Westpac surrendered 29 cents at $33.06, and Commonwealth Bank was off 37 cents at $82.02.

The broader All Ordinaries index was down 90.6 points, or 1.69 per cent, at 5,258.3 points. The December share price index futures contract was 106 points lower at 5,284 points, with 32,659 contracts traded.The price of gold in Sydney at 1700 AEDT was $US1201.30 per fine ounce, up $US7.60 on Monday’s price of $US1,193.70.