On Thursday, oil prices have jumped after 5 days of steady loss. Brent rose 2.5% to $62.70 in London stockmarket, analysts say that traders are simply trying to limit the damages after the price per barrel fell beyond 50. The losses were too sharp according to some analysts but understandable as demand remains weak and the US oil reserve supplies fell by 800.000 barrels last week, according to the energy Information Administration.
Oil has slid 45 percent this year amid slowing demand worldwide. Some Oil producers such as Venezuela and Ecuador have called to reduce output to slow the price drop but not all agree such as Saudi Arabia that has refused so far to make any move in that sense.
The investment bank Morgan Stanley has warned that oil slump could reach the price of $43 a barrel in the second quarter of next year, the Bank's analysts warned that the only way to stop the freefall would be a cut in productions, which many oil producing countries still resist.
Any current rise in oil prices is also due to the fact that U.S. dollar value rose further on Wednesday, speculation is going on that the Federal Reserve is planning to raise short-term interest rates in 2015. Since 1999 UK oil and gas production has been in steady with only a pause and slight rise in 2013 when it comes to investment.
Apparently we will see more dramatic consequences to the fall of oil prices, Oil companies and service providers are laying off staff and cutting investment to save money for the rainy days. Most oil and gas workers work as contractors, which makes it quite easy for the sector-s companies to cut and hire staff when needed, Oil industry is quite secretive which means it is quite difficult knowing what is going on.
A new study commissioned by industry body Oil and Gas UK and called 'Fuelling the next generation' points out to the same direction and predicts that 35.000 jobs in the industry could be lost by 2019.
Consequences at global level is even more worrisome, Russia's currency is in free fall, Iran's dire economy is choking the population and even more to come. The industry will have to reinvent itself or it will drag the whole world down.
