August 18, 2011: The end of the third week of August saw oil prices plummeting further to touch a $81 a barrel in Asian Markets, this was parked off by a growing concern that the slowing down of the global economy would further undermine the crude oil’s demand in the market.
The weakening US economy was the prime reason behind the tumbling markets. There are apprehensions that the US economy is heading towards recession, has resulted in a steep fall in the commodities especially oil. Crude oil sales dropped to an all time low since last two years, in Philadelphia- area manufacturing.
Investors’ sentiments further played on with the concerns of growing EU’s debts and that the European banks may have difficulties in funding. Experts are apprehending further falls in the commodity markets, due to newer financial shocks. The world economy seems to be tumbling without little signs of recovery until the oil prices weaken further.
London witnessed a fall in Brent crude by $1.53, reaching 4105.49 a barrel, as listed in ICE Futures exchange. US Crude CLc1 fell by 2%, arriving at stalling $79.17 a barrel, averaging down to an altogether of 16% for this entire month so far, a record fall since December 2008.
In the midst of falling oil prices, safer assets like gold witnessed a record all time high since two years. Gold however would ride the high tide, with more disappointments emanating from the markets.
The markets especially crude tripping further down makes, Tony Nuanan, manager of risk at Mitsubishi Corp Japan, remark that the downfall could plunge further and the overall weak economy shows little but symptoms of a bullish oil run.
According to Capital Economics, Brent is expected to fall and reach $85 during the coming year. however the optimistic view forecasts a stronger demand for crude in US in the coming phase.
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