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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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US oil price drops to 5 year low

Article By: ,  Financial Analyst
January 6, 2015 11:26 AM

Woes within the oil industry continues as US oil fell to its lowest level in five years.

On Monday (January 5th), the price of US oil dropped below the symbolic threshold of $50 (£32.80) for the first time since April 2009. It rallied before the close of the day and finished on $50.05. It followed a dip in the price of Brent crude which fell six per cent to end the trading session at $53 a barrel.

The early year performance is in line with the fortunes of oil throughout 2014. For the past six months, oil prices have been falling steadily and both Brent crude and US oil, known as West Texas Intermediate crude, have seen their value halve since the middle of the year. Investors are now concerned about a global supply glut.

In December, the Organization of Petroleum Exporting Countries (Opec) voted to retain current oil production levels despite falling prices. It followed a meeting of the cartel in November in Vienna where members discussed the potential to reduce output. Nations such as Saudi Arabia, United Arab Emirates and non-member Russia voiced their opposition to any drop in production.

Speaking in Dubai, Abdallah Salem el-Badri, secretary general of Opec, explained that price would dictate a output production decision. He added that the move was not aimed at undermining any oil producers.

Mr el-Badri said: "The fundamentals should not lead to this dramatic [in price]. Some people say this decision was directed at the United States and shale oil. All of this is incorrect. Some also say it was directed at Iran. And Russia. This also is incorrect."

The oil market in the US has been transformed substantially in recent months with the nation investing in fracking. The process, which extract oil from shale rock by injecting fluids into the ground, has resulted in a huge increase in US oil production in states such as North Dakota and Pennsylvania.

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