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Oil dips below $50 as price freefall fails to ease

Oil dips below $50 as price freefall fails to ease

The oil price reached a five-and-a-half year low this morning in early trading as the internationally recognised Brent benchmark hit $49.9 a barrel.

The fall below $50 means Brent is now down 55 per cent in the past six months from its $115 high in June.

While the fall is likely to be good for UK consumers at the petrol pumps, such a low price could weigh on the global economy.

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There are growing market fears the rapid reduction in price is not just due to oversupply - thanks in part to the Organisation of the Petroleum Exporting Countries (Opec) maintaining its production levels - but potentially symbolic of reduced demand and therefore a weaker global economy.

Business activity and sentiment has also been falling consistently for five months now - a trend confirmed yesterday when Markit’s global composite purchasing managers’ index hit 52.3 in December. This was down from 53.1 in November but a number above 50 does show expansion.