The price of Brent Crude has fallen below $50 a barrell for the first time since May 2009 due to slowing global growth and increased supply. Ciara Lee looks at the impact of the drop.
How low can it go? The price of oil just keeps dropping. For the first time since 2009, Brent crude oil fell below 50 dollars a barrel. Prices are being hammered by a growing supply glut and weak global demand. Oil markets were down for a fifth straight session and off by more than 10 percent this week. Prices have lost over fifty percent since a peak last June as stockpiles mount, and with no signs of a cut in production from OPEC. BGC's Mike Ingram. (SOUNDBITE) BGC MARKET COMMENTATOR, MIKE INGRAM, SAYING: "I think forty dollars is quite possible. I think at this level however, you are starting to get signs that some production is being taken out of the U.S. That might help to rebalance supply and demand somewhat. So I wouldn't be aggressively shorting oil at this level." After concerns that the low levels weren't being passed on to consumers at the pump, the price is now dropping. In the UK, major supermarkets have announced further cuts, bringing petrol closer to one pound a litre. (SOUNDBITE) BGC MARKET COMMENTATOR, MIKE INGRAM, SAYING: "Pre-Christmas all I was hearing was how great an oil price decline was for the consumer and a boost for the economy. As I pointed out before there are some rather unpleasant side effects to this of course. One of which is possible geo-political tension generated by some of the oil producers, I'm thinking principally here, Russia." The slide helped turn inflation negative in the euro zone for the first time in five years. And that's likely to further cloud the demand outlook - fuelling a worrying economic spiral.