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Oil slips below $90 a barrel over worries about the Eurozone's economy

by , 10 October 2014

Over the last few months, the price of oil has been retreating.

Ample supply has outweighed demand. And a stronger dollar is putting further pressure on the price.

But now fears are growing that the Eurozone may be heading back to recession. This led the oil price weaker again.

Let's take a closer look at what's going on…

Crude oil sank to a four-year low

This morning saw Crude oil slip to “a four-year low,” reports Fin24. There are concerns over “the global economy while the head of the IMF [International Monetary Fund] warned the Eurozone” may fall back into recession territory.

The IMF’s Christine Lagarde warned yesterday “that there was a 35-40% chance of the Eurozone slipping back into recession,” notes iAfrica. The body also “cut its forecasts for global growth” for this year and next year.

Yesterday, Germany revealed that its exports fell 5.8% in August, says IOL. This along with “leading think tanks” cutting their forecasts for German growth helped pull the price of oil lower.

The US has increased its oil stockpiles too, applying more pressure to the waning oil price, reports BDLive. Since June, the oil price is down “more than a fifth”.

The increase in US stockpiles is a sign of “weakening demand in the world’s top oil consuming nation,” adds Fin24.

The oil price is struggling against a number of downward pressures

United Overseas Bank in Singapore says the tumbling oil price comes down to “relentless anxiety about oversupply and waning global demand,” notes IOL. Crude oil along with West Texas Intermediate are now trading at levels last seen in 2012.

At time of writing, the price of Brent crude oil was trading at $88.94.

On the plus side, if the oil price continues to fall or remain at current levels, it could be good news for South African motorists.

With the rand trading weaker, a lower oil price could help offset the weaker local currency and perhaps prevent another fuel price hike.

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Oil slips below $90 a barrel over worries about the Eurozone's economy
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