Oil Prices Continue To Suffer
Markets across the globe fell Monday morning as oil prices lengthened their decline.
Monday, December 1, 2014 - 00:00
The S&P 500 opened 0.2% lower this morning, while the Dow and Nasdaq both lost 0.3%. In Europe, the Stoxx Europe 600 dropped 0.4%. Japan’s Nikkei closed 0.8% higher on the day, but that came before Moody’s Investors Service lowered the nation’s credit rating, which could affect the market’s performance tomorrow.
Brent crude oil dipped over 3.5% to reach $67.53 USD per barrel following a 13% decrease over the course of last week. The Organization of the Petroleum Exporting Countries (OPEC) elected not to make an effort to halt the price decline, which flustered the market.
“The immediate focus will remain on cheaper oil, [which is] good news for consumers and for those companies benefiting from reduced input cost pressures, less so for central bankers wrestling with disinflationary concerns,” Ian Williams, economist and strategist at brokerage Peel Hunt, told The Wall Street Journal.
Implications of an oil decline
According to Financial Post, the Canadian oil sector might be the hardest hit of any oil producer. Companies will need to find a way to reduce costs and find balance. Until then, prices could reach epic lows.
“Prices could spike down to $30, $40 [per barrel]. It got down to $35 in 2008, for a very short period of time,” Canadian Natural Resources Ltd. Chairman Murray Edwards told the media on Friday. “The better question is where does it stabilize, and that $70-$75 area is probably not a bad place to stabilize for a short period of time until your get more balance in terms of growth in demand and some supply response.”
While the continual drop in oil prices has global economists concerned over deflationary pressure, those industries that rely on oil production have seen a boon, reported The Wall Street Journal. Stocks in airlines, travel, leisure and transportation gained as energy became cheaper to afford.
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