Ricochet News

Oil prices slightly recover from 5-year lows

Jan 6, 2015
Oil prices slightly recover from 5-year lows

Oil recovered from a 5% plunge on Tuesday, which saw prices touching fresh 5 ½ year lows in an over-supplied market – and oil supply shows no signs of abating with output in Russia hitting a record high in 2014 and exports from OPEC's second largest producer, Iraq, reaching its highest since 1980. 

Brent crude gained 13 cents and was at $53.24 a barrel by 0226 GMT on Tuesday, after dropping to a low of $52.66 on Monday - it’s lowest since May 2009. 

US crude was up 7 cents at $50.11 after slipping below $50 for the first time since April 2009.

Analysts have pointed out a number of factors as behind the plunge in oil prices including concerns about Greece, high output from Russia, Iraq and the United States and a stronger dollar.

Not all good news

While some economists expect cheaper oil to boost consumers' purchasing power and sustain the global economy, but the 50% plunge in oil prices since June has also raised deflationary fears.

Some see sees an emerging-market crisis developing in 2015, with liquidity being squeezed out of the market. Among emerging-market oil producers, Iran, Venezuela, Nigeria, Iraq and Russia have their budgets most at risk.