Ricochet News

Oil price hits 5-year low

Dec 1, 2014
Oil price hits 5-year low

Oil prices fell more than US$2 a barrel to a five-year low in Asian trade on Monday. This is after OPEC decided not to cut production last week, keeping the markets well supplied.

Both US and Brent crude have fallen since peaking in June - oil's longest losing streak since the 2008 financial crisis.

US crude tumbled to near US$64, dragging Brent down below US$70, after Saudi Arabia's oil minister told fellow OPEC members last week that they must combat the US shale oil boom.

"They (OPEC) can get by at $60 a barrel, but that price would knock out a fair whack of the competition - much U.S. shale oil for example - as well as put investment in future capacity growth firmly on the back-burner," Australia and New Zealand Banking Group analysts said in a note.

"They're playing the long game, banking that others can't."

Brent hit a low of US$67.82 a barrel - the lowest since October 2009, and was down US$1.85 at US$68.30 a barrel by 04:47am GMT. US crude was down US$1.61 at US$64.54 a barrel, after earlier slipping to an intraday low of US$64.10 - the lowest since July 2009.

Oil-producing countries from Iraq to Nigeria are revising their 2015 budgets to reflect the lower oil prices.

Iran refrained from protesting against OPEC's decision to retain its production ceiling to maintain group solidarity, even though the move will not benefit all members, Iranian oil minister said in local media reports. 

Slower than expected growth in China's manufacturing sector is also expected to add further downward pressure on oil. 

Read more on oil's losing streak here.