MARKETS-OIL Oil prices fall to lowest in five years, hit by slowing EU economy

Record ID: 344596

  • Title: MARKETS-OIL Oil prices fall to lowest in five years, hit by slowing EU economy
  • Date: 1st December 2014
  • Summary: UNKNOWN LOCATION, RUSSIA (RECENT - FILE) (REUTERS) AERIAL OF OIL RIG VARIOUS OIL RIG VARIOUS OIL DRILLING MACHINE VARIOUS RUSSIA OIL MAP LONDON, UNITED KINGDOM (DECEMBER 1, 2014) (REUTERS) (SOUNDBITE) (English) ETX CAPITAL, HEAD OF TRADING, JOE RUNDLE, SAYING: "I think it's quite surprising that they didn't do any further action. I think all central bankers, specially the euro zone, wanted something there because it's just going to add to deflationary pressures. I think they probably will do some in the future or you're going to get some form of breakaway and people just ramping up production. So it's surprising and it's causing a negative overtone and that's why we think commodities have been, so far, so badly hit today." UNKNOWN LOCATION, GERMANY (RECENT - FILE) (REUTERS) FACTORY WORKER VARIOUS FAN TESTER AT WORK VARIOUS FACTORY WORKERS LONDON, UNITED KINGDOM (DECEMBER 01, 2014) (REUTERS) (SOUNDBITE) (English) ETX CAPITAL, HEAD OF TRADING, JOE RUNDLE, SAYING: "The main one really is China that's just the real sort of global bellwether and it looks like it is slowing down quite quickly. And that spread to the euro zone. The euro zone really is woeful at the moment and, although Germany is slowing down, the real biggest concern is France which is slipping into - appears to be slipping into a recession quite quickly so... and this is on top of policymakers out of the ECB on Saturday saying they probably aren't going to do any monetary easing so that's quite a difficult situation. I can't see the euro zone resolving itself until well into 2016." UNKNOWN LOCATION, UNITED KINGDOM (RECENT - FILE) (REUTERS) VARIOUS CLIENTS PUMPING GAS AT BP PETROL STATION VARIOUS CLIENTS PUMPING GAS IN SHELL PETROL STATION LONDON, UNITED KINGDOM (RECENT - FILE) (REUTERS) VARIOUS BROKERS TALKING ON PHONE
  • Embargoed: 16th December 2014 12:00
  • Keywords:
  • Location: Germany
  • Country: Germany
  • Topics: General
  • Reuters ID: LVA5BRPZSQDARTSF0OE69T7J6U7H
  • Story Text: Oil prices fell to their lowest in five years on Monday (December 1), hit by slowing factory activity in China and Europe and hammering emerging market stocks and commodity-linked currencies.
    Plunging prices for oil and other commodities raised fears of deflation, especially in the euro zone and Japan, and the prospect of looser monetary policy pushed the yen to a seven-year low against the dollar in Asian trade.
    Worries for policymakers at the European Central Bank, who are struggling to bolster growth and drive up dangerously low inflation, factory activity declined in the euro zone's three biggest economies: Germany, France and Italy.
    "I think it's quite surprising that they didn't do any further action. I think all central bankers, specially the euro zone, wanted something there because it's just going to add to deflationary pressures. I think they probably will do some in the future or you're going to get some form of breakaway and people just ramping up production. So it's surprising and it's causing a negative overtone and that's why we think commodities have been, so far, so badly hit today", said Joe Rundle, Head of Trading at ETX Capital.
    Manufacturing growth across Asia and Europe eased in November as heavy price cutting failed to revive demand, surveys showed on Monday, more evidence that a feeble global recovery may be grinding to a halt.
    Chinese purchase manager data showed manufacturing slowed in November, suggesting the world's second biggest economy was still losing momentum. Factory activity also slowed in France and Germany in November.
    "The main one really is China that's just the real sort of global bellwether and it looks like it is slowing down quite quickly. And that spread to the euro zone. The euro zone really is woeful at the moment and, although Germany is slowing down, the real biggest concern is France which is slipping into - appears to be slipping into a recession quite quickly so... and this is on top of policymakers out of the ECB on Saturday saying they probably aren't going to do any monetary easing so that's quite a difficult situation. I can't see the euro zone resolving itself until well into 2016", Rundle said.
    European shares opened lower. The FTSEurofirst 300 index fell 0.6 percent, weighed down by miners and oil stocks.
    MSCI's broadest index of Asia-Pacific shares outside Japan fell 2 percent, hitting six-week lows.
    Emerging market shares tracked by MSCI fell 1.5 percent. The Russian rouble was last down 4.5 percent at 52.65 to the dollar.
    Oil prices have been falling for five months as abundant supply outstrips demand. OPEC last week declined to curb output to lift prices. Brent crude fell 2.4 percent on Monday alone, to $68.54 a barrel.
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