Crude oil dropped to 5 1/2-year low early Monday as worries continue about a global supply glut.
Benchmark U.S. crude was down $1.56 at $51.13 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped 58 cents to $52.69 on Friday. Oil is down from $106 a barrel in June as global demand slackened while supplies remained high.
OPEC’s decision to not cut back on oil output and recent record-high production from Russia and the US have been the primary causes of world oversupply.
There are, however, recent events which could foreshadow a rising oil price: Recent attacks on Libyan oilfields has actually reduced OPEC’s crude output around 380,000 barrels a day, quantitative easing in Europe could help bolster the economy and increase oil consumption in that region and several multinational oil companies have budgeted lower capital spending in 2015, potentially triggering a decrease in worldwide production.