The price of oil stuck below $45 per barrel today as a glut in supply continued to unnerve investors.
Brent crude oil fell as low as $44.64 in early trading, its lowest since November last year. Meanwhile, US benchmark WTI crude fell to $42.36, its lowest since last August.
The fall came after Libyan production reached a four-year high, despite attempts by the Organisation of Petroleum Exporting Countries (Opec) to curb supply.
Although the organisation extended a production cap in May, Libya is exempt as it attempts to rebuild its economy after the civil war.
Meanwhile, the US, which is not a member of Opec, said yesterday crude inventories had dropped by 2.7m barrels, more than analysts had expected, but it wasn't enough to push up prices. Traders remain concerned about US shale production, which has continued to rise, offsetting Opec's production cap.
"Despite a brief bounce following yesterday’s larger than expected fall in US crude inventories the current oil glut fears aren’t receding," said Connor Campbell, financial analyst at Spreadex.
"Of course this decline is awful news for the FTSE, which plunged half a percent and is now only a handful of points above 7400. BP and Shell, slipping 0.7 per cent and 1.3 per cent respectively, were the biggest drag on the UK index, though the mining stocks, down thanks to a near 1 per cent fall from copper, are giving their oil-peers a run for their money."
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