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Oil slides below $50

Oil slides below $50

Oil prices took a battering on Thursday, with US prices falling below $50 for the first time this year, on signs a global supply glut is not going away.

The euro meanwhile rallied briefly against the dollar as the ECB said it no longer saw a deflation threat and would end some of its massive support for the eurozone economy.

Equities were under pressure during Asian and much of European trading after as a closely-watched report showed a shock surge in US oil inventories, rekindling worries about the oversupply that has hammered the crude market since mid-2014.

The Energy Department on Wednesday revealed a whopping eight-million barrel increase in supplies over the past week — four times more than expected — owing to higher domestic production and increased stockpiling.

Both main oil futures contracts slumped to lows not seen since the end of last year and sending New York prices sliding below $50 a barrel.

Jeffrey Halley, senior market analyst at Oanda trading group, said the inventories report was the “straw that broke the camel’s back”, with concerns already abounding that Russia was not pulling its weight on much-vaunted production cuts agreed between OPEC and non-OPEC countries in November.

In Thursday trading, shares in oil giant Royal Dutch Shell shed 2.0 percent and rival BP lost 1.5 percent on the London stock market. The FTSE 100 index was weighed down also by falling mining shares.

Asian energy firms had already taken a hit, with Japan’s Inpex shedding 1.2 percent, Hong Kong-listed PetroChina diving 2.2 percent and CNOOC losing 1.8 percent.

Woodside Petroleum fell 1.1 percent in Sydney and later in European activity, French energy group Total slid 0.8 percent.

“The data catalysed a new wave of glut concerns as the higher oil price might spur North American’s production, especially of shale oil, which may ultimately counterbalance OPEC’s effort to support oil prices,” said CMC Markets analyst Margaret Yang.

Meanwhile US stocks drifted upwards on Thursday after data on new US jobless claims last week indicated a healthy labour market, beefing up expectations for a positive key government jobs report on Friday and the likelihood the Federal Reserve will hike interest rates next week.

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