Oil sinks to new 5 and a half year lows, dominates the markets

The markets are suffering a Groundhog Day situation at the moment, with every morning seeing losses due to the ongoing oil-price crisis.

Brent Crude oil lost sight of its most recent support level, as it closed and opened firmly around the $63 per barrel level, even dipping below this mark this morning. With $65 seemingly gone, investors will be finding it even harder to predict the bottom of oil’s demise. As every piece of oil-related information serves a new blow to the commodity, Brent Crude could sink much further below its current 5 and a half year low, with some analysts suggesting a drop to $50 per barrel could be on the cards.

Out of the worldwide indices, the FTSE has been the biggest victim of the oil-price crash, as its energy sector capitulates under the pressure of Brent Crude’s decline. With stocks like Tullow Oil, Petrofac, Afren and Enquest all continually being on the losers pile, the FTSE hasn’t had a chance for any positivity this week, unlike the brief rallies in Europe or the price recoveries in the US. This saw the UK index open at 6417.3 after closing Thursday at 6418.8, falling to as low as 6374 after the bell. The FTSE’s miserable week was compounded by the UK’s construction output figures, which came in at -2.2%, dismal figure when compared to the forecast 0.8%.

The DAX and its Eurozone bedfellows followed their usual trend this morning, losing whatever gains they made in their QE-hopeful daze yesterday afternoon. As German WPI came in at -0.7%, much lower than the 0.3% forecast, the DAX fell over 50 points to open at 9751.2, shedding another 50 points after the bell. Overall industrial production figures for the Eurozone are expected today; if the indices’ follow their recent trend, a weak figure, aka more pressure on Draghi to implement QE, may see the Eurozone markets undergo one of their trademark hope-inspired rallies.

Japan’s Shinzo Abe will have a smile of his face today, as the Nikkei finally rid itself of its losing streak, closing 60 points higher than open at 17371.6. With the Japanese election on Sunday, this will be a final, and perhaps unneeded, boost for Abe’s chances of re-election. Abe and the LDPs are expected to romp to a victory on Sunday, as the Prime Minister readies the release of his third arrow from his ‘Abenomics’ quiver.

Finally the Dow Jones, propelled on the back of the latest round of strong US data, marginally brought an end to its three day losing streak to close at 17553.5. However, this does mean that the Dow has haemorrhaged 400 points in this oil-clouded week, leaving the previously inevitable 18000 level a lot less likely target for the end of 2014. This could change, with the US releasing PPI, core PPI and preliminary University of Michigan consumer sentiment figures this afternoon; if yesterday is any indication, a good round of numbers could see the US index recover more ground.