The price of oil is rising slightly this morning, reducing some of its losses from one of the worst collapses of the year. Yesterday oil crashed to its lowest level since 2009.
This morning crude is trading in positive territory, gaining 0.06 (+0.10%) and is valued $US63.11 a barrel at about 9am GMT.
At 9.30am, Brent is also in green, gaining 0.12 (+0.18%) and more importantly surging back above the $US66 threshold.
Of course, these are only minor improvements. It’s expected that after a very bad fall prices might surge a little the following day.
The long-term scenario still looks pretty bleak for oil producers.
This chart shows the oil price from the beginning of the year:
The crash has multiple consequences around the world:
- Several shale gas exploration projects are being put on hold, in particular in Argentina and China. The Vaca Muerta basin in western Argentina holds some of the largest shale oil reserves on the planet and it is supported at state level, but the private sector has not invested in the fracking technology as it simply is not feasible at the current price.
- Russia is among the countries that is suffering the most because of falling oil profits. The Russian Rouble has entered a painful downward spiral and private investors are starting to pull their money out of Russian markets. As a comparison, the Russian economy is now only the same size as Spain’s, a much smaller country.
- In the UK, BP has announced cuts both among staff and further projects, as oil companies are trying to slash the costs.