Crude Oil Prices Drops Further to $33 a Barrel.

Are slowing economic growth in countries such as China helping to drive the sharp drop in crude prices?.. With producers in the U.S. and Mideast still pumping oil at a fast clip, a drop-off in demand would add to the global supply glut that has shaved about 70% off prices over the past 18 months.

The US benchmark crude-oil contract tumbled 70 cents to $33.27 a barrel Thursday on the New York Mercantile Exchange. That is the lowest since February 2004.

Some analysts and traders don’t believe the current low prices can last much longer. Companies eventually will stop pumping money-losing barrels, curbing global supplies and setting the stage for a rebound.

Earnings are down for companies that have made record profits in recent years, leading them to decommission nearly two-thirds of their rigs and sharply cut investments in exploration and production. More than 200,000 oil workers have lost their jobs, and manufacturing of drilling and production equipment has fallen sharply.

It is, therefore, important that the government begins to make contingency arrangements should the crude oil price fall below the benchmark price or better still, review the benchmark oil price downwards.

Earnings are down for companies that have made record profits in recent years, leading them to decommission nearly two-thirds of their rigs and sharply cut investments in exploration and production. More than 200,000 oil workers have lost their jobs, and manufacturing of drilling and production equipment has fallen sharply.