LONDON: Global oil prices on Monday (Tuesday in Manila) collapsed under $50 per barrel for the first time in more than five years on the strong dollar, plunging equities, demand worries and plentiful crude supplies.
The renewed slump came as the Dow index stood down more than 200 points and European equity markets lost more than two percent on fears of a Greek exit, or so-called Grexit, from the eurozone.
The US benchmark West Texas Intermediate for February delivery tumbled to $49.95 per barrel, touching the lowest level since May 1, 2009.
London’s Brent North Sea crude for February dropped to a similar nadir at $52.66 a barrel.
“Greek problems may spell trouble for the eurozone [and]may impact energy demand out of Western Europe—especially with press suggesting German politicians are talking about Grexit,” said Ransquawk analyst Anthony Cheung.
New York crude later stood at $50.27, down $2.42 from Friday’s closing level. Brent was at $53.09 a barrel, down a hefty $3.33.
The euro fell to a nine-year low against the dollar on worries that a victory in Greece by the far-left Syriza party in the January 25 election will result in the country’s departure from the eurozone.
The single currency was also dented by growing expectations of quantitative easing, or economic stimulus, from the European Central Bank.
The euro dived on Monday to $1.1864, a level last reached back in March 2006.
Oil has dropped about 50 percent since June on worries about weak demand and a decision by the Organization of the Petroleum Exporting countries not to cut output in response to lower prices.
Daniel Ang, investment analyst at Phillip Futures in Singapore, said crude prices are expected “to continue to be on [a]bearish trend.”
“After what seemed to be profit-taking at the end of the year, oil bears have returned from their holidays and are back for more,” he said.
“As we continue to take a bullish stand for the US economy, we expect the dollar to strengthen, thus putting further downward pressure on oil prices.”