The price of West Texas Intermediate oil slumped below $US45 overnight for the first time since 2009. It recovered slightly to $45.35 but fell more than 5% yesterday.
It’s reasonable to start talking about how low oil can go. Goldman Sachs thinks that could be $US40 for the first half of the year. It’s down 59% already since mid-June last year.
If WTI falls down to below $US41, it will be testing territory that hasn’t been seen in a decade.
Brent, the other major benchmark for global oil prices, is just a little higher at $US45.88 after falling below $US50 per barrel for the first time in six years nearly a week ago.
The fall in oil prices is having a dramatic effect around the world: Producer nations like Russia and Venezuela are suffering, and the previously booming US shale industry is also likely to be tested if prices stay low.
The plunge has helped to push the eurozone into deflation for the first time since 2009, but consumers everywhere are likely to drive up consumption a little as falling fuel prices increase their disposable income.