Oil flirting with $60 as reality of slow recovery sets in
Filed under: Energy
Assuming 'rogue' traders aren't distorting the markets, the price of oil is set by simple supply and demand forces. Or at least, by what traders believe the forces would amount to. An attack on a Nigerian oil field that threatens the world's oil supply would push prices up, while news of growing unemployment that could affect demand would push them down.Still, simple as it sounds, sometimes there's just too much news pushing, pulling and affecting supply and demand forces in all direction. Take today, for example. While crude prices ended up closing higher, they wavered around $60 per barrel following news of tepid retail sales and soaring continuing jobless claims. Consumers, fearing job losses and being bombarded by bad economic news daily, are cutting back. On everything.
Looking at it from a different angle, though, oil snapped a six-day slide today. If on Wednesday the price of oil fell 5.74 percent as weekly inventory data showed a steeper-than-expected build in gasoline stocks, today oil got support from companies announcing refinery shutdowns.
Meanwhile, Joe Lazzaro reported Wednesday that "OPEC, producer of about 40 percent of the world's oil, now expects global demand in 2013 to be less than last year's level" because it expects the recovery to be U-shaped.
On the bright side, however, the International Monetary Fund said in a revised forecast yesterday that the world economy will expand 2.5 percent in 2010, but of course, that's after contracting 1.4 percent this year. Also, China's vehicle sales jumped 48 percent in June. Both these reports indicating possible better demand for oil in the future.
The question is now whether the optimism that helped crude prices to more than double from $33 a barrel lows in March to over $70 last month will continue. In the past week, that optimism was pretty much gone altogether as reality set in that this is going to be a long and slow economic recovery. Equity markets slumped and oil prices declined to even dip below $60 a barrel intraday today -- a seven-week low -- as concerns over waning oil demand grew. During tough economic times companies and consumers cut back on oil consumption. Will the supply side adjust if that's the case?
While it's always better to see oil trading on fundamentals rather than speculation, it's hard to peg supply and demand forces -- not only where they would meet, but often times the data itself can point to different direction on either force. And if you're not confused enough, let's not forget the effect the U.S. dollar has on oil as U.S. dollar denominated commodity.
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Reader Comments (Page 1 of 1)
7-09-2009 @ 7:34PM
Joe Roy said...
Analyst say Oil is going back t $30.00 a barrel, Go figure the Forth of July tavel was down, no one can afford to travel with the prices at the pump being driven by greed. The market is down, because those that can afford to buy stock are hiding their millions from OBAMA who wants to take it all in taxes.
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7-09-2009 @ 10:55PM
dang said...
With the way things are looking, dead-retail level, jobless reports, nose-diving fuel demand with overflooding crude supplies, no-signs of 2nd stimulus, weary and zero confident of consumers, DOW plunging, people are afraid to travel and afraid of spending, I don't think the economy will ever recover with this $1 a day sinking oil-price...
I say if you want to stimulate consumer confidence, you need to drop oil and gasoline price... That's where people around globe has their eyes focussed on, and not the economy itself... The economy is just an illusion, but the price of gasoline at the pump is real, something people know it's real and feel in their pockets... So if you lower the price of fuel, you can guaranty you will stimulate the people's pockets and confidence and will start to travel and start spending...
Forget Wall Street, forget the plunging DOW reports, focus on oil-price that has caused all these CRASHES to begin with, put the plug on speculations and Wall Street manipulations and you will see this economy be healed in the process without having to spend useless of TRILLION$$$ of stimulus dollars.... There's no reason why oil should be at $60 and gasoline so high at $3...
If these "DESTRUCTIVE" F*CKING scvmbag "PARASITES" of the Earth was able to survive 6-years ago when crude was on the market at $28 bbl, there's should be no reason to why these same exact "DESTRUCTIVE" F*CKING scvmbag "PARASITES" can't survive today on $30 a barrel!!
Lower oil-price back to $28 bbl and gas back to $1.45 and STOP the STIMULATION of TRILLION$$$ of wasted borrowed dollars!!! You're only stimulating the pockets of those scvm parasitics in Wall Street, Goldman Sachs, Morgan Stanley, NYMEX, Singaporean Merchantile Exchange, Brent Spot, WTI Cushing, AIG, BankOfA, Citi Bank, and rest of SCVMBAG Corporations!!!! And get this, many of these SCVMBAG corporations aren't even American owned, they're F*CKING foreigners inflicting their corruptions here while conducting from far away on foreign land!
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7-10-2009 @ 2:51AM
DrDooom said...
The economy won't recover until oil-price returned back down to $28 bbl and gasoline to $1.45 gal where they belongs... Until then, the consumer and the world will continue to not have any confidence to travel, buys and spend>>> further nose-diving the economy into deep-hole...
Excessively over-priced oil is the reason people worldwide are DISCOURAGE, aren't traveling, and when people aren't traveling, they too won't be spending... And just a reminder, it was overpriced oil and fuel-price that got us into this shiiit-hole economy at the first place.
OPEC exports their oil at $5 to $6 per barrel to the U.S. and Wall Street and all these Crude trading posts over the world manipulates it into the market at over $60... Now that's where the spotlights should be directed to, cause they're the ROBBERS and CRIMINALS!!!
Below are the No.#1 PARASITIC culprits:
Wall Street, Goldman Sachs, Morgan Stanley, NYMEX, Brent Spot, WTI Cushing and the Singaporean Mercantile Exchange.
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7-10-2009 @ 5:08AM
stella said...
http://www.mobilephone7.com
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