By Georgi Kantchev And Nicole Friedman
Oil prices continued to tumble Tuesday on weak economic data out
of Europe and China, with Brent crude falling below $60 a barrel
for the first time since May 2009.
Crude has fallen by close to 50% since June to levels not seen
since the depths of the global recession. Driven by sluggish demand
and ample supplies, the slump in oil prices is having a ripple
effect across financial markets and economies.
Brent crude, the global benchmark, fell $2.16, or 3.5%, to
$58.90 a barrel on ICE Futures Europe.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in January traded down $1.90, or 3.4%, to $54.01 a
barrel.
Activity in Germany's private sector grew at the weakest pace in
18 months in December, with the purchasing managers index, the main
industrial gauge, falling to 51.4 from 51.7 in November. France's
private sector also continued to decline. Data from China, the
world's second-largest consumer of oil, showed its manufacturing
sector slowing with HSBC's flash PMI for December dropping to 49.5.
A level below 50 indicates a contraction.
"There is still a lot of panic in the market, and the latest
data out of China and Europe doesn't seem to change that picture,"
said Thina Saltvedt, an oil market analyst at Nordea Bank.
The Organization of the Petroleum Exporting Countries won't call
for an emergency meeting unless something drastic happens in the
oil market, the United Arab Emirates' oil minister said Monday.
On Tuesday, Russia's energy minister Alexander Novak said that
his country would maintain its current level of oil production next
year.
The drop in oil prices continued to rattle financial markets and
currencies around the globe. In a dramatic overnight move, the
Russian central bank raised its key interest rate to 17% from 10.5%
after the ruble's sharpest daily drop against the dollar in more
than a decade. The ruble remained under pressure Tuesday.
The Russian interest rate increase doesn't bode well for the
already sluggish demand for oil, Commerzbank said. "Demand next
year looks set to develop less dynamically than previously
anticipated, oil-producing countries like Russia being particularly
to blame," the bank wrote in a note.
The International Energy Agency last week cut its forecast for
next year's oil demand growth by 230,000 barrels a day to 900,000
barrels a day following similar cuts by OPEC and the U.S. Energy
Information Administration.
"With soft economic data today and with neither Russia nor OPEC
not cutting production, things might still get worse," a
London-based oil broker said. "The market still feels very
vulnerable and I can see it touching $50 this week which would be a
shocker for everybody."
January reformulated gasoline blendstock, or RBOB, fell 5.28
cents, or 3.4%, to $1.5236 a gallon.
January diesel slid 4.88 cents, or 2.4%, to $1.9529 a
gallon.
Eric Yep, Asa Fitch and Summer Said contributed to this
article.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
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