Oil price slide hits stock markets

Brent North Sea crude dived to $36.62 a barrel on Monday - a level last seen on December 26, 2008


Afp December 14, 2015
A Jakarta Stock Exchange employee speaks on his cellular phone in front of trade screen monitors in Jakarta on December 14, 2015. PHOTO: AFP

LONDON: Oil prices tumbled to the lowest levels in almost seven years Monday, dampening European stock markets.

Investor sentiment was dented also by expectations that the Federal Reserve would raise US interest rates Wednesday.

Brent North Sea crude dived to $36.62 a barrel on Monday -- a level last seen on December 26, 2008.

US benchmark West Texas Intermediate (WTI) slumped to $34.67 -- last witnessed on February 19, 2009.

Stock markets in Frankfurt, London and Paris began Monday with solid gains but were dragged lower by the latest tumble in crude oil.

Oil prices linger near seven-year lows

"Collapsing oil prices and the potential rise in interest rates in the United States ... compounded investors' nerves," said David Papier, analyst at traders ETX Capital.

"Oil prices continued their freefall after the International Energy Agency warned that global oversupply could worsen next year."

Nearing midday on Monday, London equities rose 0.1 per cent, while Frankfurt slid 0.5 per cent and Paris turned flat.

The oil market, which hit similar lows on Friday, has been punished by OPEC's recent decision to maintain output despite predictions of a stubborn surplus.

Crude has slumped dramatically since the OPEC oil producers' group on December 4 opted against cutting its output levels, and there are warnings of further pain ahead as the global economy struggles.

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About 1200 GMT, Brent North Sea crude for delivery in January traded at $36.70 a barrel, down $1.23 compared with Friday's close.

WTI lost 81 cents to $34.81 a barrel.

In stock market trade, shares in energy giant Shell were down 2.0 per cent at 1,424.50 pence.

Royal Dutch Shell on Monday said it planned to cut 2,800 jobs following its mega takeover of smaller rival BG Group.

Shell's £55-billion (US$84-billion, 79 billion-euros) acquisition of BG Group had already been cleared by authorities in Australia and Brazil, as well as the European Commission.

Adding to the unease on trading floors is this week's Federal Reserve policy meeting that is widely expected to see US interest rates raised for the first time since 2006.

Oil prices sink as OPEC decides to not cut output

Asia stock markets also fell on the back of the on-going oil market rout.

Tokyo shed 1.8 per cent and Hong Kong ended down 0.7 per cent, while Sydney slipped two per cent and Seoul gave up one per cent.

However, Shanghai surged 2.5 per cent as traders welcomed surprisingly strong Chinese economic data at the weekend.

Miners were also boosted by news that China's aluminium smelters pledged Friday to halt new mills.

All three main indexes on Wall Street had finished in the red Friday.

London - FTSE 100: UP 0.1 per cent at 5,959 points

Frankfurt - DAX 30: DOWN 0.5 per cent at 10,290

Paris - CAC 40: FLAT at 4,550

EURO STOXX 50: DOWN 0.2 per cent at 3,196

Tokyo - Nikkei 225: DOWN 1.8 per cent at 18,883.42 (close)

New York - Dow: DOWN 1.8 per cent at 17,265.21 (close)

Euro/dollar: DOWN to $1.0962 from $1.0996 late in New York on Friday.

Dollar/yen: UP to 121.16 yen from 120.86 yen

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