Oil continues slump as Iraq, Russia output hit new highs

Oil prices continued to fall today to another low following a 5-per cent plunge in the previous session amid worries about surplus oil supplies which were fuelled by data showing output in Russia hit a post-Soviet-era high in 2014 and exports from Iraq, OPEC's second-largest producer, were the highest since 1980.

Jitters over political uncertainty in Greece also drove investors out of risk assets globally to safe-haven bonds.

Brent crude touched a fresh low since May 2009 at $52.28 a barrel early today, though it recovered slightly to $52.83 later. US crude was at $49.63, down 41 cents, after earlier dropping to a new low since April 2009 at $49.32.

US commercial crude oil and products stockpiles were forecast to have risen in the week ending 2 January, a preliminary Reuters survey showed on Monday, and this could weigh on prices further.

A rise in the dollar index for the sixth straight month in December has made dollar-denominated oil more expensive for holders of other currencies, depressing prices.

Some economists expect cheaper oil to boost consumers' purchasing power and buoy the global economy, but the 50 per cent plunge in oil prices since June has also raised deflationary fears.

A rebalancing of portfolios of major commodity indices that starts on Thursday may widen the spread between Brent and West Texas Intermediate. (See: US oil futures drop to new lows amid fears of supply glut).