OIL PRICES DOWN
US crude prices plunged below $40 a barrel for the first time since the financial crisis on Friday, amid increasing signs the year long oil rout still has further to run.
Brent, the international benchmark, also fell to its lowest since March 2009, touching $45.10 a barrel.
The latest bout of selling came after Baker Hughes data showed an increase in the number of rigs drilling for oil in the US.
The resilience of the US shale industry has prolonged an oil glut that has sent the energy sector into turmoil, as many see low prices persisting for months if not years.
The world's biggest oil companies have slashed spending and jobs while the budgets of producers countries have been decimated.
West Texas Intermediate, the US benchmark, was primed for its eighth straight weekly decline, its longest losing streak in almost 30 years.
Oil extended its losses earlier on Friday after Chinese data showed a contraction in factory activity that rippled through global stock markets.
China's manufacturing sector shrank by the most in six and a half years, adding to fears of economic malaise in the world's biggest oil consumer. Although demand has remained strong as China takes advantage of cheap oil to bolster its strategic reserves, there are signs of weakness.
"China has sent shockwaves through global markets and raised numerous questions on the outlook," said analysts at Société Générale, who forecast a "prolonged period of weaker growth in a number of the major emerging markets".
European equity markets fell sharply following a steep sell-off in Asian stocks and emerging Asian currencies.
"The sour mood was largely mirrored on the oil markets with speculation of easing global demand weighing on the complex," said David Hufton at London-based oil broker PVM.
Brent crude, the global oil benchmark, was on track for its seventh weekly loss out of eight — down 8 per cent.
Its US counterpart West Texas Intermediate is set for its longest stretch of weekly losses since 1986 — down 6 per cent this week
Data earlier this week showed US crude inventories continued to rise. "WTI had never left a negative momentum but Brent is returning to it," said Olivier Jakob at consultancy Petromatrix.
Giovanni Staunovo, analyst at UBS, said he expects the oil price to remain weak in the short run as the market works off a surplus of around 1m barrels a day in the second half of this year.
Opec producers Saudi Arabia and Iraq are still pumping aggressively, while supplies from the US and other non-Opec countries have been more resilient than initially anticipated. Baker Hughes reported the number of rigs drilling for oil had risen by 2 last week
"A sharp increase in Opec crude production and/ or weaker oil demand from emerging Asia in 2016" could be a risk that looms, said Mr Staunovo.
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