Crude Oil Prices Continue Free Fall

Brent crude oil continued its free fall on Tuesday, falling below $60 earlier in the morning. The commodity traded at $61.50 at 8:30 GMT, having made a modest comeback from its earlier five-year low.

The growing global supply glut has forced energy prices lower as investors worry that the declining economic climate will not promote enough demand to keep up with increasing supplies. Data out on Tuesday helped solidify those concerns as one of the world's largest consumers released economic data that indicated a slowdown.

The Wall Street Journal reported that China’s December factory activity data showed that the sector declined for the first time in seven months. The second-largest oil consuming nation’s HSBC manufacturing purchasing managers’ index dropped to 49.5 from 50.0 in November. Most had expected the nation’s reading to clear the 50 mark that separates expansion and contraction, so the reading came as a surprise.

Also weighing on prices were concerns about emerging markets, where currencies have been declining rapidly. Russia worked to stem the rouble’s losses by increasing its interest rate 6.5 percent on Tuesday, but the currency continued to struggle. In India the rupee declined on the nation’s deteriorating trade deficit and the Indonesian rupiah was down to its lowest level in 16 years in early trading.

The state of the global economy will likely remain the only driver for crude prices unless producers were to cut back on production. Though some of OPEC’s members continue to call for the group to cut back after November’s decision to maintain normal production levels, most analysts don’t see a cut coming any time soon.