The relentless plunge in oil prices shows no sign of stopping.
As of about 11:45 am ET, West Texas Intermediate crude was trading at around $US58 per barrel, a loss of about 3% in the last 24 hours. On Friday morning, WTI futures briefly cracked $US58 for the first time since May 2009.
The price initially dipped below $US60 Thursday.
The International Energy Agency just cut its forecast for oil demand for the fourth time in five months, a pretty strong signal that there will be no upswing in prices anytime soon.
The price of WTI is down by nearly 45% since mid-June, plunging from above $US107 per barrel to below $US60.
Brent crude, the international benchmark, is falling too, down 2.5% on Friday to as low as $US62.07.
The slide is just going on and on after OPEC, the cartel of oil-trading nations, refused to agree on a cut in production. Saudi Arabia, the world’s largest oil producer, still seems pretty relaxed with just letting the price slide.
Get ready for the knock-on effects, too. Europe’s inflation, which was already pretty close to non-existent, has yet to reflect the absolute plunge in oil prices seen over the past month:
It’s not just inflation figures getting squeezed. Different countries and oil fields need to earn different amounts from the oil they produce to break even.
In the middle east, that’s an extremely low amount, just $US10-$US20 per barrel in some countries. In Venezuela, it’s closer to $US40, and some US shale oil and gas fields are already approaching their break-even point.
But it’s not all bad news. Other than in the major oil-producing countries, most nations around the world should get a modest GDP boost from the drop in prices, which makes a lot of things like fuel and industrial production cheaper, leaving people with more money to spend on other things.