The Irish Times
Stock markets see week of turmoil as crude price sinks to seven-year low
Stock markets were left nursing losses after a week of turmoil in commodity and stock markets.
Oil prices were in freefall yesterday, a fresh day of turbulence that followed a forecast from the International Energy Agency that a glut of crude will persist for another year.
Dealers said the markets had been unsettled by concerns about the health of the Chinese economy and the likelihood that the US Federal Reserve will next week raise interest rates for the first time in nine years. The value of China’s currency, the yuan, fell to a 4½-year low in anticipation that the Federal Reserve may raise interest rates.
Gloom was deepened by news of the liquidation of Third Avenue, the biggest failure of a US mutual fund since the financial crisis of 2008. Third Avenue specialised in high-risk junk bonds, and its closure prompted speculation other firms could also be in trouble.
The failure by the Opec oil cartel to announce production curbs on December 4th triggered the fall in the cost of crude, with knock-on effects on share prices.
Saudi Arabia has been willing to tolerate a lower oil price as part of its campaign to kill off the US shale sector, and the markets are also braced for Iranian oil to hit the commodity markets following the end of the west’s sanctions.
During US morning trading a barrel of Brent crude was changing hands at $37.68, down 5 per cent on the day and the lowest level for seven years. Some analysts predict crude could hit $30 a barrel over the coming weeks.
– (Guardian service)
$30 The price some analysts believe oil will command per barrel in the coming weeks