The price of Brent crude oil fell by 6% to US$53 on the 5th of January, signalling the worst first Monday of the year on record for the UK’s bluechip index. With West Texas Intermediate also dropping to a five year low of US$50, there is a growing concern between investors, that a weakening demand could see a further decline in weeks to come.
The latest slump, which has seen the price of Brent Crude oil half from this time last year, is further evidence of OPEC’s decision to continue at the same production rate, despite the current dwindling demand for oil.
As Brent crude decreases, economic growth is expected to increase, as lower oil prices will see business costs cut and disposable incomes grow. In particular, UK consumer spending is currently overseeing the benefits, as supermarkets reduce fuel prices by up to 2p a litre.
The price of Brent crude has fallen again, risking its biggest monthly drop in two years. Disappointing news from China and fears about the Spanish banking system has, at least temporarily, eroded gains made as a result of the Iranian nuclear question.
Despite holding steady for the moment, Brent crude prices look set to suffer their steepest drop in over three months as global economic news disappoints.
Concerns over growth in Europe and China coupled with the possibility of diplomatic resolutions to crises in the Middle East has seen Brent crude prices fall.