Oil Prices Dip to Seven-Year Lows Below US$40

Published By : 08 Dec 2015 | Published By : QYRESEARCH

Oil prices fluctuated between losses and gains on Tuesday after dropping to almost seven year lows amid traders awaiting inventory data and production forecasts from the US government. 

Earlier in the session, the global benchmark Brent dipped below US$ 40 per barrel for the first time since 2009.

Oil prices have been dipping over the past year with producers including members of the Organization of the Petroleum Exporting Countries and the United States pumping oil at almost record highs. Oil prices were also affected by a strong dollar this year, making dollar priced commodities increasingly expensive for those buyers who use foreign currencies. 

Some of the top most beneficiaries of the retreating oil prices are US drivers. The average US retail price of gasoline on Tuesday was US$ 2.027 per gallon, which dropped 64 cents below the previous year and was the lowest level since March of 2009, according to the American Automobile Association. The motor club said that an estimated two thirds of the gas stations in the country have been selling gasoline for less than US$ 2 per gallon.

Countries that depend on oil for their revenue have been struggling and the persistent decline in oil prices has been upsetting financial markets all year. Some analysts have cautioned that the low prices of oil today could lead to a spike in price in the future because firms have been slashing billions of dollars in new production investments and are likely to reduce more spending in 2016. 

The global benchmark Brent dipped as low as US$ 39.81 per barrel in initial trading and recently traded up 0.4 per cent or 16 cents to settle at US$ 40.89 per barrel on the ICE Futures Europe. The US benchmark, on the other hand, rose 0.9 per cent or 35 cents to reach US$ 38 per barrel on the New York Mercantile Exchange.

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