Oil drops to almost $50 a barrel amid fears for the global economy

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The price of Brent crude oil fell to just above $50 a barrel, provoking new warning signs about the global economy. Fears over Greece pulling out of the euro and slow worldwide growth sent investors racing out of oil, sending shares into disarray again.
The price of Brent crude oil fell to just above $50 a barrel down by $2.59, provoking new warning signs about the global economy. Fears over Greece pulling out of the euro; emergency money-printing measures from the European Central Bank; and slow worldwide growth sent investors racing out of oil, sending shares into disarray again.

The flight from equities to bonds, driven by speculation that ECB president Mario Draghi could launch a €1 trillion quantitative easing programme within weeks, hit bond yields yesterday, with benchmark 10 year profits falling to 1.56% in the UK, marking the first time they have fallen below 2% in the world’s largest economy since May 2013.

Markit’s chief economist, Chris Williamson stated “the loss of momentum towards the year end will no doubt fuel worries that the upturn is too fragile to withstand higher interest rates.” Markit’s latest data on private sector firms across the Eurozone warned that growth moved at the weak pace of 0.1% in the final quarter of 2014, further fuelling reports for stimulus from Mr Draghi.

“There’s no guarantee a renewed downturn will not be seen in 2015” Mr Williamson said. Eurozone inflation figures today are likely to reveal prices falling across the region for the first time since 2009.

From China, which has been an engine of global growth in recent years, the news was not much better as a modest revival for services firms barely offset manufacturers’ recent distresses. “We continue to believe that there is insufficient demand in the overall economy and more easing measures are warranted in the coming months,” HSBC said.