Crude oil falls below $68 per barrel

Watch the world economy tank in real time as Brent crude falls below $68 per barrel

Oil hits five-year low as Chinese manufacturing growth slows - business live

• All the breaking business news, as the oil price slides and Asian factories report weakening growth
• Brent crude falls below $68 per barrel
• Chinese factory growth hits eight-month low

http://www.theguardian.com/business/live/2014/dec/01/oil-five-year-low-manufacturing-pmi-china-eurozone-live

Oil hits lowest level since 2009

The oil price has hit its lowest levels since October 2009 as the steep selloff than began last week continues.

The news that China’s manufacturing growth had hit an eight-month low helped to drive the price of a barrel of Brent crude down to just $67.76 this morning.

That’s a fall of 3.4%, or $2.40, since Friday night. Brent has tumbled by 14% since Opec decided not to cut this production levels last week:

 Brent crude oil, 2009-2014 Photograph: Thomson Reuters

New York crude also slid to a new five-year low this morning, hitting $63.95 per barrel.

The scale of the selloff has stunned many in the markets:

As Phillip Futures analysts said in a research note:

“Just when the market was thinking that a 4-year low for crude oil was bad enough, we have hit a 5-year low after the OPEC meeting,”

$50bn wiped off Australia's stock market since Friday

Australia’s stock market has also been hit hard by the oil price slide.

Fears that the global is slowing down helped to wipe $30bn off the main Australian index today.

That takes the total losses since Friday to $53bn, on an index heavy with mining and energy firms.

The benchmark S&P/ASX 200 Index shed almost 2% today. with the energy sector diving by over 6%.

The Sydney Morning Herald has more details:

Local shares are now trading down 2.7 per cent for the year-to-date, while the dollar is trading around levels not seen since July 2010 as a slide in global oil prices puts pressure on the local market.

At its bi-annual meeting last week, the Organisation of Petroleum Exporting Countries (OPEC) elected to maintain production levels despite a slide in energy prices over recent months as the growth in global supply has outstripped the growth in demand.

“Through OPEC the Saudis have declared an oil price war on the US and Australia is getting caught in the crossfire,” Fiducian Group investment manager Conrad Burge said.

Japan downgraded by Moody's

 Japanese Prime Minister Shinzo Abe. Photograph: KIMIMASA MAYAMA/EPA

Just in: Moody’s has downgraded Japan’s credit rating, from AA3 (the fourth-highest rating) to A1 (five-highest).

Moody’s blamed ‘heightened uncertainty’ over Japan’s ability to hit its deficit reduction goals, and to achieve the growth targets set by the government.

It says:

The first driver for the downgrade of the Japan government’s debt rating to A1 is the rising uncertainty over whether the government’s medium-term deficit reduction goal is achievable, and whether policy makers can overcome the tensions inherent in promoting growth while simultaneously stabilizing and reversing the rising debt trajectory.....

The second driver for the downgrade is the rising uncertainty over the government’s ability to enhance medium term growth through structural economic reform -- the third ‘arrow’ of Abenomics -- success in which will be crucial to achieve fiscal consolidation. While some indicators suggest a pick-up in economic activity over the past year, potential economic growth remains low.....

The full statement is here.

The yen wobbled on the news, hitting a new seven year low of ¥119.15 against the US dollar.

But the downgrade isn’t likely to have any immediate impact on Japan. Its borrowing costs are currently at record lows, despite its huge national debt (over 200% of GDP).

Jamie McGeever        ✔ @ReutersJamie

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Moody's downgrades Japan to A1 from Aa3 ... just as Japan enjoys lowest borrowing costs on record. Last week, 2y yield even went negative

9:44 PM - 1 Dec 2014

Crude Carnage Goes Contagious As Brevan Howard Liquidates Underperforming Commodity Fund

http://www.zerohedge.com/news/2014-11-30/crude-carnage-goes-contagious-brevan-howard-liquidates-underperforming-commodity-fun

The entire commodity complex is seeing major contagion-like price declines in early trading. WTI Crude is back below $65 for the first time since May 2010 - now down 16% since the initial leaks of OPEC's decision last Wednesday. Gold and Silver are getting whacked and copper has plunged below 300 - back at its lowest since June 2010. The news over the weekend that Brevan Howard is liquidating its $630 million commodity hedge fund following recent poor performance is also likely not helping as what looked like late-Friday margin call liquidations are extending notably this evening.

WTI is down 16% since the initial OPEC decision leaks last week by Venezuela...

And volume is heavier than normal for a Sunday night

As The Wall Street Journal reports,

Brevan Howard Asset Management LLP plans to close its commodity hedge fund following recent poor performance, according to two people familiar with the matter.

 

The fund, managed by Stephane Nicolas, has $630 million in assets. It lost 4.2% last year and is down 4.3% this year to the end of October, according to performance data reviewed by The Wall Street Journal.

 

It is not clear what Mr. Nicolas’s role might be following the commodity fund’s closure, a person familiar with the matter said. Attempts to reach Mr. Nicolas were unsuccessful.

 

Brevan Howard is among Europe’s largest hedge fund managers with about $37 billion in assets.

I have not seen a sign of reporting on the oil price crash reported in the NZ media - however there was this

The country's purchasing power with the rest of the world has fallen due to lower dairy prices.

Radio NZ,

1 December,2014

Official figures show the terms of trade, which measures the amount of imports that can be bought with a given amount of exports, fell 4.4 percent in the three months to September, after six successive quarters of gains.

ANZ Bank senior economist Mark Smith said dairy auction prices had halved since February, and that was being reflected in the data.

"We're starting to see some of that come through now pretty loud and clear, particularly with export prices down 4.5 percent but dairy down around more than twice that, so it's very much a dairy story at present," Mr Smith said.

The terms of trade is now 5.9 percent below its all time high in the June 1973 quarter.

Statistics New Zealand said export prices fell more than import prices.

Exported goods fell 4.5 percent, led by dairy and forestry products, which more than offset higher meat prices.

Dairy prices tumbled 11 percent, their second consecutive quarterly fall, with milk powder prices down 13 percent.

Forestry products fell 3.9 percent, reflecting lower prices for pine logs as international demand decreased and stocks built up in China.

In contrast, meat prices rose 4.3 percent, with beef prices rising to its highest level since the March 2002 quarter, while lamb prices also gained.

Excluding dairy, export prices fell 0.9 percent.

Import prices edged down 0.1 percent, with the main contribution from falls in prices of cell phones, televisions and digital cameras, which offset higher crude oil prices.

Seasonally adjusted export volumes declined 0.1 percent, led by declines in forestry, while imports rose 2.7 percent due to gains in capital goods.