Oil prices continued their downward spiral on Monday with U.S. crude hitting a 6-1/2 year low. Crude continued to plummet after No 3. consumer Japan announced a second straight quarter of economic decline.
Oil was also hit by a stronger dollar which made greenback-denominated commodities, including crude, less affordable for holders of other currencies such as the euro.
According to Reuters, “U.S. crude futures CLc1 were 5 cents down at $42.45 by 11:30 a.m. EDT (1530 GMT). The intraday low was $41.64, versus Friday’s low of $41.35, the weakest front-month price since March 2009.”
Futures of Brent LCOc1, the global crude benchmark, were also cut by 10 cents at $49.09 a barrel.
According to officials in Japan, the countries annualized pace shrunk by 1.6 percent from April-June as exports continued to decline and consumers in the country cut back on spending.
China also set its exchange rate slightly higher two days in a row follow the countries decision to devalue its own currency by 3 percent off the yuan last week.
Since June oil has declined by 30 percent.
U.S. crude oil has declined for seven weeks in a row as U.S. oil producers continue to add new oil rigs while growing production substantially.
Brent oil has fared better than U.S. crude oil but has still suffered at the hands of increased global supply.
In good news for consumers, a cheaper oil mix for the winter months is set to push gas prices in the United States below $2 per gallon on average.