Oil prices dipped below $40 a barrel for the first time in 6 ½ years on the prospect of falling global demand, breaking through a key price threshold that could signal further declines and market turmoil. The price of West Texas Intermediate for October 2015 delivery dropped as low as $39.86 a barrel on August 21st, the first time it was under $40 since March 2009. U.S. crude prices have now fallen for eight straight weeks, the longest such stretch since 1986.
The decline came on news of weakness in China’s manufacturing sector and a U.S. government report that domestic oil inventories unexpectedly rose last week. Meanwhile, the start of a refinery maintenance season slated to run through October is also pushing more crude onto the market. Consumers may welcome the price drop, but clearly there will be losers , including major petroleum exporters such as OPEC members Russia, Libya, and Venezuela — along with American producers who have been riding the fracking boom.
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