Global oil prices today collapsed under USD 50 for the first time in more than five years on the strong dollar, plunging equities, demand worries and plentiful crude supplies.
The renewed slump came as the Dow index stood down more than 200 points and European equity markets lost more than two percent on fears of a Greek exit, or so-called Grexit, from the eurozone.
At about 1630 GMT, US benchmark West Texas Intermediate for February delivery tumbled to USD 49.95 per barrel, touching the lowest level since May 1, 2009.
London’s Brent North Sea crude for February dropped to a similar nadir at USD 52.66 a barrel.
“Greek problems may spell trouble for the eurozone (and) may impact energy demand out of Western Europe—especially with press suggesting German politicians are talking about Grexit,” said Ransquawk analyst Anthony Cheung.
New York crude later stood at USD 50.27, down USD 2.42 from Friday’s closing level. Brent was at USD 53.09 a barrel, down a hefty USD 3.33.
The euro fell to a nine-year low against the dollar on worries that a victory in Greece by the far-left Syriza party in the January 25 election will result in the country’s departure from the eurozone.
The single currency was also dented by growing expectations of quantitative easing, or economic stimulus, from the European Central Bank.
The euro dived today to USD 1.1864, a level last reached back in March 2006.
“The dollar keeps strengthening and weighing on oil prices, with the Federal Reserve still on track to lift rates, while non-farm data on Friday should be another decent jobs statistic,” added Cheung.
A long rally in the greenback, which gained 11 percent last year against a basket of major rival currencies, has weighed on the dollar-priced oil market by making crude more expensive for buyers using weaker currencies.
Oil has dropped about 50 per cent since June on worries about weak demand and a decision by the Organization of the Petroleum Exporting countries not to cut output in response to lower prices.