London: Oil suffered another dizzying plunge on Tuesday, with Brent crude sliding to a five-year low under $59 as markets were rocked by shrinking Chinese manufacturing output and turmoil in Russia.
In afternoon trade in London, benchmark contract Brent North Sea crude for January delivery slumped to $58.89. Earlier it had fallen as far as $58.50 per barrel -- the lowest level since May 2009.
New York`s West Texas Intermediate (WTI) for January hit a similar nadir at $53.80 in electronic deals in European trading hours, and upon opening of trading in New York it established itself at $54.24.
The oil market has plummeted by almost 50 percent since June, dented also by OPEC`s recent decision to hold its output ceiling in an oversupplied market.
Sentiment was hit by the Russian central bank`s shock move to raise interest rates to 17 percent, which has failed to arrest the slide of the ruble.
The Russian ruble crashed to new record lows Tuesday, losing some 20 percent in value by the afternoon despite drastic overnight measures by the central bank to hike the key rate.
A senior central banker called the situation "critical" and pledged further actions to stabilise the ruble, which has now lost some 60 percent of its value this year as it hit 80 to the dollar and 100 to the euro on the Moscow Exchange."The combined effects of slumping oil, the Russian Central Bank`s interest rate hike and falling output from China have all come together to deliver a triple blow to the markets," said ETX Capital analyst Daniel Sugarman.
China`s manufacturing activity worsened in December with HSBC`s purchasing managers` index (PMI) hitting a seven-month low at 49.5 percent, below the break-even point dividing expansion and contraction, signalling weakness in the world`s second-largest economy and top energy consumer.
"Lower output from China means less of a need for oil, while as a primary oil producer Russia really feels the pain of lower oil prices, compounded by the sanctions imposed earlier this year."
European stock markets saw volatile trading on Tuesday, sliding in morning deals on tumbling oil prices before rebounding briefly on news of bright investor sentiment in eurozone engine Germany.
However, Europe`s main indices hit reverse gear again in early afternoon trade, in line with a renewed plunge in oil, which weigh on the profits and share prices of energy companies.
"Everywhere you look at the moment, there is bad global news, be it the ruble, Chinese manufacturing, or most significantly, Brent crude oil," Spreadex analyst Connor Campbell told AFP.
"If something doesn`t change, be it an OPEC/USA decision on oil, or a lifting of sanctions on Russia, the markets are going to be unable to build up a substantial bullish run to drag the global economic situation into calmer waters."
Stock markets in the energy-rich Gulf states were hit hard as oil resumed its fall, with both the Dubai and the Saudi Tadawul All-Shares Index, the largest in the Arab world, falling 7.3 percent.
Since OPEC decided to maintain its production unchanged on November 27 and oil prices began their dive the Dubai exchange has fallen 31.5 percent and the Saudi index 19.2 percent.
In afternoon trading Frankfurt`s benchmark DAX 30 index shed 0.63 percent compared with Monday`s close to 9,275.07 points, and the CAC 40 in Paris fell 0.80 percent to 3,973.44.
London`s FTSE 100 dipped 0.14 percent to 6,174.08 points, as data showed Britain`s annual inflation rate slowed to a 12-year low of 1.0 percent in November.
US stocks opened lower, with the Dow Jones Industrial Average shedding 0.42 percent in the first five minutes of trade to 17,109.49 points.
The broad-based S&P 500 plummeted 1.12 percent to 1,979.88, while the tech-rich Nasdaq Composite Index lost 0.58 percent to 4,578.60.
Asian stock markets mostly fell Tuesday following Monday`s sell-off in Europe and the United States that was rooted in the sliding oil prices.
Hong Kong equities shed 1.55 percent, Sydney fell 0.65 percent and Tokyo dived 2.01 percent in value.
Shanghai stocks however jumped 2.31 percent on hopes the government will introduce new measures to spur economic growth.The European single currency meanwhile rose Tuesday to $1.2528 from $1.2435 late Monday, lifted by upbeat eurozone and German data on the eve of the US Federal Reserve`s latest monetary policy decision.
German investment sentiment rose sharply in December after a rebound the previous month, driven by a weak euro and plunging oil prices, a survey showed Tuesday.
The investor confidence index, calculated by the ZEW economic institute, jumped by 23.4 points in December, after rising for the first time this year in November, ZEW said in a statement.
In addition, a key survey showed that business activity in the eurozone accelerated slightly in December.
Markit Economics said its Composite Purchasing Managers Output Index for the 18-country zone that uses the single currency rose marginally to 51.7 points in December from 51.1 points in November.
