Oil at 6-year low, Sends stocks sinking

Oil Price is at a 6-year low at $41 per barrel, this meltdown is making energy related stocks go slipping on a downward curb.

The Dow was 228 points early in the day and closed at 160, which is the lowest it has been since January. This can be attributed to the selloffs from ExxonMobil (XOM) and Chevron (CVX). The S&P 500 and the Nasdaq also dropped by almost 1%. This is good news for American consumers, but investors fear that this may have a detrimental effect on the global economy.

International money manager David Kotok even stretches to claim that this price is not yet the bottom, suggesting that oil prices can stick dwindle down to $15 to $20.

Last Week, the US Energy Information Association announced that US crude stocks increased 2.6 million barrels at 456.21 million barrels. Stocks at the delivery point of the US crude futures at Cushing, Oklahoma increased 326,000 barrels to 57.44 million. US crude oil futures ended at 4.3 percent at $40.80 per barrel, the lowest it has been since March 2009. Analysts expect stockpiles to continue to rise further in the next several years, because refineries are starting to shut down units for their seasonal maintenance.

However, as the September contract expired Thursday, the oil price saw a small spike, which is now $41.14. Analysts still claim that prices will still continue to go down because investors are anxious about the global glut of crude growing.

Wolfe Research claims that it has to get worse before the oil prices get better. The speculations that oil prices could go down further or stay low for a longer period of time only means that producers of oil could be prompted to cut additional spending or sell assets to keep the business running.