The US oil price has fallen below the symbolic threshold of $50 a barrel for the first time since April 2009.
The price of Brent crude also fell on Monday, dipping more than 6% to trade at below $53 a barrel.
The price of both Brent crude and US oil, known as West Texas Intermediate crude, have now lost more than half of their value since mid-2014.
Investors are worried that combination of a global supply glut and weak demand could cause prices to tumble further.
US oil production has soared recently, as fracking - or the process of extracting oil from shale rock by injecting fluids into the ground - has revolutionised oil production in the country, transforming US states such as North Dakota and Pennsylvania in the process.
However, the increase in production has come just as economies across the world - from Europe to China - have slowed their once voracious demand for oil.
This, combined with Opec's decision to continue extracting oil at its current pace, has left many investors worried.
That has in turn led shares of many of the world's leading energy firms, from BP to Exxon Mobil, to decline sharply over the past few months.
The price of Brent crude also fell on Monday, dipping more than 6% to trade at below $53 a barrel.
The price of both Brent crude and US oil, known as West Texas Intermediate crude, have now lost more than half of their value since mid-2014.
Investors are worried that combination of a global supply glut and weak demand could cause prices to tumble further.
US oil production has soared recently, as fracking - or the process of extracting oil from shale rock by injecting fluids into the ground - has revolutionised oil production in the country, transforming US states such as North Dakota and Pennsylvania in the process.
However, the increase in production has come just as economies across the world - from Europe to China - have slowed their once voracious demand for oil.
This, combined with Opec's decision to continue extracting oil at its current pace, has left many investors worried.
That has in turn led shares of many of the world's leading energy firms, from BP to Exxon Mobil, to decline sharply over the past few months.
[h=1]World stocks plunge into the red as oil price falls and spectre of 'Grexit' put New Year fear into the markets[/h]
- FTSE 100 index falls by 2.2%; French and German blue-chip stocks more than 3% down on fears of Greek eurozone exit
- Wall St falls 1.3% on the open as oil price plunge hits commodity stocks
- Brent crude falls to $54 a barrel - lowest price since May 2009
The London stock market plunged into the red today as a plummeting oil price and heightened eurozone fears hit shares on both side of the Atlantic.
Stocks fell on the open on Wall Street after oil prices tumbled to their lowest levels since May 2009, and that doubled the losses for the FTSE 100 index, which closed 143.14 points or 2.2 per cent down at 6,404.66.
And the German and French leading indices each lost 3 per cent amid fears that the forthcoming Greek election will see the nation leave the eurozone. In the US meanwhile the Dow Jones Industrial Average fell 185 points to 17,648.
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Market fear: Global stock markets plunged today on concerns over the eurozone and the falling oil price
Stocks fell on the open on Wall Street after oil prices tumbled to their lowest levels since May 2009, and that doubled the losses for the FTSE 100 index, which closed 143.14 points or 2.2 per cent down at 6,404.66.
And the German and French leading indices each lost 3 per cent amid fears that the forthcoming Greek election will see the nation leave the eurozone. In the US meanwhile the Dow Jones Industrial Average fell 185 points to 17,648.
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Market fear: Global stock markets plunged today on concerns over the eurozone and the falling oil price
Alastair McCaig, market analyst at IG said trading screens were 'a sea of red' as talk of a Greek exit from the eurozone drives equity markets lower.
'We are now entering what could be the final chapter of the Greek saga, in which the indebted nation breaks free from the single currency and tries to go it alone.
'The rise of the anti-austerity Syriza party has sent shivers down the spine of dealers as they are well positioned for the election this month. A victory for the left-wing party does not automatically mean a Greek exit but traders will certainly see it that way.'
He added that the relentless battering of big oil stocks is only going to intensify as the world oil price approaches $50. Commodities stocks led the declines in both New York and London as the price of a barrel of Brent crude slipped below $54. It has more than halved from more than $115 a barrel in June.
Connor Campbell, financial analyst at Spreadex, said oil's decline into the new year had been prompted by a raft of weak manufacturing data last week.
He said: 'The black stuff is still looking abandoned and lost as 2015's trading begins in earnest, and continues to be a stain on the worldwide markets.'
In the US, the broader S&P 500 index shed 23.4 points to 2,034.9, and the tech-laden Nasdaq Composite fell 41.3 points to 4,685.5.
Shares in heavyweight FTSE 100 oil majors BP and Royal Dutch Shell fell sharply, down 3 per cent and more than 2 per cent respectively.
The euro meanwhile fell to nine-year lows as the spectre of a 'Grexit' rose again and expectations hardened that the European Central Bank will soon resort to cash injections to prop up the eurozone economy.
'We are now entering what could be the final chapter of the Greek saga, in which the indebted nation breaks free from the single currency and tries to go it alone.
'The rise of the anti-austerity Syriza party has sent shivers down the spine of dealers as they are well positioned for the election this month. A victory for the left-wing party does not automatically mean a Greek exit but traders will certainly see it that way.'
He added that the relentless battering of big oil stocks is only going to intensify as the world oil price approaches $50. Commodities stocks led the declines in both New York and London as the price of a barrel of Brent crude slipped below $54. It has more than halved from more than $115 a barrel in June.
Connor Campbell, financial analyst at Spreadex, said oil's decline into the new year had been prompted by a raft of weak manufacturing data last week.
He said: 'The black stuff is still looking abandoned and lost as 2015's trading begins in earnest, and continues to be a stain on the worldwide markets.'
In the US, the broader S&P 500 index shed 23.4 points to 2,034.9, and the tech-laden Nasdaq Composite fell 41.3 points to 4,685.5.
Shares in heavyweight FTSE 100 oil majors BP and Royal Dutch Shell fell sharply, down 3 per cent and more than 2 per cent respectively.
The euro meanwhile fell to nine-year lows as the spectre of a 'Grexit' rose again and expectations hardened that the European Central Bank will soon resort to cash injections to prop up the eurozone economy.
German Prime Minister Angela Merkel has said that a Greek exit from the eurozone would be likely if the left-wing party Syriza won the forthcoming General Election and abandoned the austerity programme the country is following at the EU's insistence.
Meanwhile the single currency was also weakened by the prospect of quantitative easing being launched by ECB chief Mario Draghi at the central bank's January policy meeting, taking the euro to a nine-year low of $1.186.
The introduction of QE would bring the eurozone in line with most of the other main central banks, including the US and UK, which have purchased large amounts of their own government's debt debt since the recession bit.
While the dollar and sterling took an initial hit when their central banks' money-printing schemes were announced and launched, they have since appreciated on their economies' recoveries.
Sterling climbed today, trading near to six-year highs at 1.28 against the euro and boosting the spending power of UK holidaymakers preparing for breaks in the likes of Spain, France or Italy.
It had passed 1.29 euros on Friday to reach its highest level since October 2008 before being weighed down by disappointing UK manufacturing and mortgage approval data and is now worth around seven cents more than a year ago.
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Euro turmoil: Global markets edged down over concern that Greece may be forced to leave the euro
Meanwhile the single currency was also weakened by the prospect of quantitative easing being launched by ECB chief Mario Draghi at the central bank's January policy meeting, taking the euro to a nine-year low of $1.186.
The introduction of QE would bring the eurozone in line with most of the other main central banks, including the US and UK, which have purchased large amounts of their own government's debt debt since the recession bit.
While the dollar and sterling took an initial hit when their central banks' money-printing schemes were announced and launched, they have since appreciated on their economies' recoveries.
Sterling climbed today, trading near to six-year highs at 1.28 against the euro and boosting the spending power of UK holidaymakers preparing for breaks in the likes of Spain, France or Italy.
It had passed 1.29 euros on Friday to reach its highest level since October 2008 before being weighed down by disappointing UK manufacturing and mortgage approval data and is now worth around seven cents more than a year ago.
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Euro turmoil: Global markets edged down over concern that Greece may be forced to leave the euro
There is some doubt whether a QE scheme would even help improve the eurozone economy. A survey of 32 economists by the Financial Times today found that 26 expected the ECB to introduce QE in 2015 and most expected growth and inflation to remain low even with QE.
The majority of economists also expect the ECB to purchase sovereign debt as well as covered bonds and asset-backed securities if it begins a QE programme.
This seems more likely after the ECB agreed to expand its balance sheet from €2trillion to €3trillion at its December policy meeting.
There is growing concern that the eurozone will re-enter recession this year and further alarm about deflation with the inflation rate dropping to 0.3 per cent in November, almost five times lower than the ECB’s target of a little below 2.0 per cent.
The drop in oil prices in December adds to deflationary pressures and means inflation could fall further when the next set of figures are published.
Mrs Merkel’s spokesman said on Sunday that Germany 'assumes' that Athens will stick to the economic reforms imposed as part of the €240billion bailout but that if it didn’t a Greek exit would not threaten the single currency because sufficient reforms have been implemented since the height of the euro debt crisis in 2012 so that a Greek exit would not be catastrophic.
Merkel also believes it is more important to ensure the markets see other larger economies such as Spain and Italy as secure.
ECB President, Mario Draghi, told German financial daily newspaper Handelsblatt on Friday that the risk of the central bank not fulfilling its mandate of preserving price stability was higher now than half a year ago.
'The market took his comments to mean that he is ready to adopt quantitative easing,' said Shin Kadota, chief forex strategist at Barclays in Tokyo.
Germany’s Bundesbank, the biggest player in the eurozone, was one of six policy makers that voted against introducing QE at the ECB’s last policy meeting, but is not expected to publicly oppose the policy if it is introduced in the next few months. The next ECB meeting is on January 22.
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Roolercoaster ride: Sterling has endured a turbulent two years and its path over the next 12 months will be crucial for families and businesses across the UK
The majority of economists also expect the ECB to purchase sovereign debt as well as covered bonds and asset-backed securities if it begins a QE programme.
This seems more likely after the ECB agreed to expand its balance sheet from €2trillion to €3trillion at its December policy meeting.
There is growing concern that the eurozone will re-enter recession this year and further alarm about deflation with the inflation rate dropping to 0.3 per cent in November, almost five times lower than the ECB’s target of a little below 2.0 per cent.
The drop in oil prices in December adds to deflationary pressures and means inflation could fall further when the next set of figures are published.
Mrs Merkel’s spokesman said on Sunday that Germany 'assumes' that Athens will stick to the economic reforms imposed as part of the €240billion bailout but that if it didn’t a Greek exit would not threaten the single currency because sufficient reforms have been implemented since the height of the euro debt crisis in 2012 so that a Greek exit would not be catastrophic.
Merkel also believes it is more important to ensure the markets see other larger economies such as Spain and Italy as secure.
ECB President, Mario Draghi, told German financial daily newspaper Handelsblatt on Friday that the risk of the central bank not fulfilling its mandate of preserving price stability was higher now than half a year ago.
'The market took his comments to mean that he is ready to adopt quantitative easing,' said Shin Kadota, chief forex strategist at Barclays in Tokyo.
Germany’s Bundesbank, the biggest player in the eurozone, was one of six policy makers that voted against introducing QE at the ECB’s last policy meeting, but is not expected to publicly oppose the policy if it is introduced in the next few months. The next ECB meeting is on January 22.
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Roolercoaster ride: Sterling has endured a turbulent two years and its path over the next 12 months will be crucial for families and businesses across the UK
Many people knew the EU was a disaster to begin with. Pretty much turning countries in to states and giving most power to the most powerful economic countries. Austerity is a disaster as every knowledgeable person pointed out. The only way the EU can work is if they turn it in to one bonding/taxing/spending agent... which politically might be impossible. Otherwise, there is no real fix to it. The UK is probably ditching that shit this year, Greece will most likely also, unless something drastic is done. I personally said it would be a mess starting in 2009. All it takes is an understanding of monetary systems to realize why.
They should be OK long-term as China/India grow and price fixing starts to happen
In your opinion do alaskans want more drilling? On Joe Rogan's pod he said he has been there and talked to them and besides the 1s in the oil industry they mostly don't and wan't to preserve the environment there.
He probably came to Anchorage and talked to college students or something, because all I've experienced is pro drilling from anywhere outside Anchorage or Fairbanks. The villages are pro drilling, they are some of the most vocal about opening up ANWR. The only real topic that is kind of split is offshore drilling from Shell. There's a lot of resistance to that. Otherwise this is a super conservative state, dumb enough to vote in "Drill drill drill" Palin. But it's a tough industry sometimes, I remember the last collapse in prices, thousands of engineers were let go across the state, wages were cut by 7% across the board for most oil companies. I don't work in the field now, so I don't get all the juicy gossip I use to. I work at home and haven't been to the office in almost 7 months. Luckily we are in the middle of a project that goes through 2017... but I was planning on making some serious dough with these two projects that are being put on hold.
The falling oil price is a good thing for consumers. But there is another side to this story that it pays to be aware of - the danger that lies in the oil price slump. As investors chase income in a low interest rate world, they have been willing to accept lower and lower rates on junk bonds - and at the forefront of the wave of over-priced high-yield bonds have been US shale oil and gas firms, whose very existence is now threatened.The falling oil price is a good thing for consumers.
Markets have been hurt by oil’s sudden dive and the low inflation threat, but ordinary people have cheered cheaper petrol prices and businesses have welcomed lower costs.
I think a bout of low inflation should spell good news for Britain’s squeezed consumer economy – to the extent that I included it in my reasons to be cheerful for 2015.
But there is another side to this story that it pays to be aware of – the danger that lies in the oil price slump.
The defining investment trend since the financial crisis has been the hunt for yield that has sent bond prices soaring.
As investors chase income in a low interest rate world, they have been willing to accept lower and lower rates on junk bonds – the name given to high-yield lower grade company IOUs.
Companies have rushed to tap this cheap cash – and investors have been very keen to give it to them.
Markets have been hurt by oil’s sudden dive and the low inflation threat, but ordinary people have cheered cheaper petrol prices and businesses have welcomed lower costs.
I think a bout of low inflation should spell good news for Britain’s squeezed consumer economy – to the extent that I included it in my reasons to be cheerful for 2015.
But there is another side to this story that it pays to be aware of – the danger that lies in the oil price slump.
The defining investment trend since the financial crisis has been the hunt for yield that has sent bond prices soaring.
As investors chase income in a low interest rate world, they have been willing to accept lower and lower rates on junk bonds – the name given to high-yield lower grade company IOUs.
Companies have rushed to tap this cheap cash – and investors have been very keen to give it to them.
Both institutional and private investors are happy to take on more risk for a much lower interest return than you would usually expect.
Part of this is a reflection of the perhaps correct belief that low rates are the new normal and that central banks will do everything they can to keep kicking a rate hike down the road.
If inflation is low and interest rates are low, then you realign your expectations on what a company or government needs to pay you to lend it money.
But quite a lot of the past few years' activity in the bond market carries the classic hallmarks of a bubble.
One of the major areas to benefit from this has been the firms taking part in the US shale gas and oil revolution. Many have borrowed big to play in the new oil rush and investors have been happy to join the game too.
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Oil players: The shale revolution has triggered a new rush for oil in the US by small firms
In a succinct piece of analysis on junk bonds, from Alliance Bernstein's blog Context, Ivan Rudolph-Shabinsky and Petter Stensland highlight how at the end of October 2014, debt issued by energy firms made up 15 per cent of the Barclays US High Yield Index. That compares to less than 5 per cent ten years ago.
'It’s hard to find a historical example of so much money chasing an opportunity that ended well,' they argue. 'Typically, such ambitious investment leads to bubbles, and the bubbles eventually burst.'
Almost all of the US shale oil rush firms will have done their sums for success based on a much higher oil price than the $60 a barrel it has slumped below.
The low oil price threatens some firms’ existence. Those US shale firms don’t make up a big enough part of the junk bond market to sink it on their own with a wave of defaults.
But the question is whether such an event can be contained – or if its knock-on effects will spell very bad news?
I sincerely hope this doesn’t happen and I think 2015 should prove to be a more prosperous year than we expect.
Ultimately, I think cheap oil will be good news for both consumers and investors – yet it’s always worth considering the risks as well as the opportunities.
By SIMON LAMBERT FOR THE DAILY MAIL
PUBLISHED: 18:06, 6 January 2015 | UPDATED: 18:06, 6 January 2015
Part of this is a reflection of the perhaps correct belief that low rates are the new normal and that central banks will do everything they can to keep kicking a rate hike down the road.
If inflation is low and interest rates are low, then you realign your expectations on what a company or government needs to pay you to lend it money.
But quite a lot of the past few years' activity in the bond market carries the classic hallmarks of a bubble.
One of the major areas to benefit from this has been the firms taking part in the US shale gas and oil revolution. Many have borrowed big to play in the new oil rush and investors have been happy to join the game too.
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Oil players: The shale revolution has triggered a new rush for oil in the US by small firms
In a succinct piece of analysis on junk bonds, from Alliance Bernstein's blog Context, Ivan Rudolph-Shabinsky and Petter Stensland highlight how at the end of October 2014, debt issued by energy firms made up 15 per cent of the Barclays US High Yield Index. That compares to less than 5 per cent ten years ago.
'It’s hard to find a historical example of so much money chasing an opportunity that ended well,' they argue. 'Typically, such ambitious investment leads to bubbles, and the bubbles eventually burst.'
Almost all of the US shale oil rush firms will have done their sums for success based on a much higher oil price than the $60 a barrel it has slumped below.
The low oil price threatens some firms’ existence. Those US shale firms don’t make up a big enough part of the junk bond market to sink it on their own with a wave of defaults.
But the question is whether such an event can be contained – or if its knock-on effects will spell very bad news?
I sincerely hope this doesn’t happen and I think 2015 should prove to be a more prosperous year than we expect.
Ultimately, I think cheap oil will be good news for both consumers and investors – yet it’s always worth considering the risks as well as the opportunities.
By SIMON LAMBERT FOR THE DAILY MAIL
PUBLISHED: 18:06, 6 January 2015 | UPDATED: 18:06, 6 January 2015
Thats a pretty self centered opinion you got there.
That would be like me hoping it would go up to 300
