CANBERRA: Oil prices have come all way in Australia. After a big drop earlier in the day to as low as $US52.03 a barrel, West Texas Intermediate crude is at $US53.50 a barrel, pulling back almost all of its earlier losses.
These are the lowest levels since spring 2009. The earlier drop followed manufacturing PMI reports from China and the eurozone, which signaled that economic activity slowed in December. Manufacturing data from the US on Friday morning also slowed that expansion in that sector slowed in December, with Markit’s manufacturing PMI growing at its slowest pace in almost a year last month.
These unfavorable demand signals were exacerbated by unfavorable supply signals. “Russia’s 2014 oil output hit a post-Soviet record high average of 10.58 million barrels per day (bpd), rising by 0.7 per cent helped by small non-state producers, Energy Ministry data showed on Friday,” Reuters reports. According to Bloomberg, Iraq exported 2.94 million barrels of oil a day in December, the most since the 1980s. When it comes to supply, all eyes continue to be on Saudi Arabia, which refuses to cut oil production despite plunging prices.
