The price of oil has hit another record low, despite the decision just months ago by OPEC members to cut supply.
Brent crude, the international benchmark, was down 2.09% at $45.97 at 9pm UK time but earlier in the day it had gone as low as $45.62, its lowest level since November.
The low comes on news of increases in supply by Libya and Nigeria, both of which are exempt from the production cuts announced late last year.
At that time, OPEC and other non-OPEC producers such as Russia agreed to cut output by 1.8 million barrels a day for the first six months of 2017.
That deal helped Brent climb back above $50 per barrel from lows below $30 witnessed in January 2016 – contributing to higher profits for many oil companies while motorists faced growing fuel bills.
In May, OPEC and other oil producers extended cuts into March next year in a further effort to increase prices, but the price of Brent crude continued to head downwards.
The weakness weighed on the commodity-heavy FTSE 100, which fell by 0.68%, with BP and Shell alone contributing just under half of the index’s 51-point fall by Tuesday’s close.
Most of the time, the FTSE and the pound work in opposing directions – when the pound goes down the FTSE goes up. This is because such a large proportion of profits for FTSE 100 companies is made in dollars. If sterling weakens then dollar revenues (converted back into sterling) are worth more.
Today, however, the pound was down to a two-month low of around $1.2603 by 4pm compared to $1.2732 at Monday’s close just as the FTSE also closed lower.
A speech earlier in the day by Bank of England governor Mark Carney pouring cold water on raising interest rates in the near future, and speculation on how tough the terms will be for Brexit as formal negotiations got underway, may both have contributed to the negative sentiment.
Source: SKY News Feed