Oil follows stocks downwards

19 January 2010

Written by John King.

Crude oil prices dropped during the electronic trading session on the New York Mercantile Exchange this morning (January 19th), tracking a fall in equities markets.

As European markets opened, the headline crude oil contract was trading around the $78-a-barrel mark, marking the seventh straight day of losses, while heating oil also dropped.

The commodity endured a bearish start to the week as demand concerns re-emerged following the easing of the cold weather front that has struck North America and Europe.

This morning, traders were focused on wider losses in equity markets, while comments from the International Energy Association made yesterday also highlighted underlying demand weakness.

According to Bloomberg, the group's deputy executive director, the Organization of Petroleum Exporting Countries will not need to raise production quotas in 2010 due to expectations of persistently weak demand.

In the wake of the 2008 financial crisis, the organisation announced production cuts totalling 4.2 million barrels a day.

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