Oil Prices Crash To $38 For First Time Since 2009

Oil prices fell in Asia today as diplomats tried to ease geopolitical tensions sparked by Turkey’s shooting down of a Russian fighter jet on the Syrian border. Posco (Korea Stock Exchange: 549-KR) climbed as much as 1 percent while Hyundai Steel (Korea Stock Exchange: 402-KR) added 1.18 percent.

The last time the crude oil sold as low as that was in February 2009 when the prices crashed to $38.10 per barrel. The magnitude of these gains has been muted this year because of massive commercial stockpiles that act as a shock absorber when worries about the reliability of supplies surface.

“An agreement to cut the production target will definitely be a booster for oil prices”, Aw said.

Crude oil prices rallied Tuesday amid concerns that the conflict in Syria will escalate.

U.S. President Barack Obama and French President Francois Hollande, meeting in Washington, urged against an escalation, while North Atlantic Treaty Organisation Secretary-General Jens Stoltenberg said the military alliance stood in solidarity with Turkey.

Futures the FTSE China A50 Index added 0.2 percent in most recent trading.

Higher interest rates encourage the inflow of money to a country, buoying its currency, and in the case of the dollar the effect is usually negative for oil prices, which are priced in the United States currency.

“OPEC is producing more than its ceiling and I asked them to reduce production and respect the ceiling, but it doesn’t mean that we don’t produce more because it is our right to return to the market and to preserve our rights and our share in the market”, he said. The rapid unwind of bearish wagers tends to exert upward pressure on prices. As oil is priced in dollars, it becomes cheaper for holders of other currencies as the greenback weakens. In the Brent market, funds held the most short positions since October 2014, according to Intercontinental Exchange Inc.

Gasoline supplies in NY Harbor, the delivery point for gasoline futures, were also tight amid lower imports and the delayed restart of the 70,000 barrels-per-day gasoline making unit at Irving’s St. John, New Brunswick refinery.

Markets showed no immediate reaction to a worldwide travel alert issued by the U.S. State Department, that warned USA citizens of the risks of travelling because of what it described as “increased terrorist threats”. The EIA data is due Wednesday, and the American Petroleum Institute, an industry group, is due to release its own data later Tuesday.

“The stock market does not like uncertainty”, Hamasaki said.