Oil Continues Downward Spiral, Hits 6 1/2 Year Low

Oil Prices Continue To Slump

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.

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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.

Written by Peter Mondrose

Peter Mondrose

Peter Mondrose is the Editor-In-Chief at BusinessPundit. He received his degree in Economics in 1998 and a second degree in Journalism in 2004. He has served as a financial adviser, market trader, and freelance journalist for the last 11 years. When he's not investigating market conditions and reporting on workplace news, he can be found traveling with his wife, dog, and laptop. He can be reached at PeterMondrose@BusinessPundit.com or (929) 265-0240.