Oil drops to new 7-year lows

The international prices of oil have hit fresh 7-year lows in what appears to be a result of growing oversupply concerns. 

US benchmark West Texas Intermediate (WTI) for delivery in January was down 28 cents at $36.48 and Brent crude for January was trading 26 cents lower at $39.47 at around 0240 GMT, their lowest levels since early 2009 during a global financial crisis, AFP reported.

Friday’s plunge is specifically blamed on a forecast by that the International Energy Agency that demand will remain low over most of the next year.

The IEA said in a monthly report that growth in demand for oil will ease next year to 1.2 million barrels per day, from 1.8 million barrels a day this year.

Analysts are blaming rising oil production, largely by OPEC member states, for declining prices.

Several OPEC members, notably Iran and Iraq, are looking to boost output as they emerge from sanctions and conflicts.

The IEA expects oversupply to continue at least until late next year, suggesting prices will struggle to recover.

The low oil prices on Friday strongly weighed down on US share prices.  The sharp drop in oil prices specifically added to US investor uncertainty as the Fed Reserve prepares to raise interest rates for the first time since June 2006 at its meeting next week.

China’s yuan has also fallen to its lowest in 4-1/2 years on concerns about the country’s slowing economy and expectations of a US rate hike.

Global shares were lower on Friday amid concerns that weakness in the Chinese currency could weigh on the global economy and on companies with strong export ties to China.

By Press TV