According to Jonathan Barratt, MD of Commodity Broking Services, it all started with some fundamental news and people questioning the resolve of the recovery that US has had. On Wall Street, the Dow and the S&P 500 fell about 1% as energy shares slumped with the price of oil. This seems to be a result of lowering of demand powered by worries about the job market ahead of Friday's key employment report. On the other hand, he pointed that if we get a resolution on Libya then all of sudden we are going to see 1.4 million barrels coming on to the market. When you look at that type of fundamental news, just on the horizon, you could probably suggest that crude could actually trade all the way down to USD 80 a barrel.
The decline of $9.44 per barrel, or 8.6 per cent, brings the week's loss for oil to $14.13, or 12.4 per cent. Other commodities like silver and cotton have plunged as well. Oil was continuously being considered to be at much a higher level than it should be. Oil rose 35 per cent from mid-February through the end of April. As it climbed above $100, economists warned that high fuel prices were taking a toll on the US economy. Gasoline demand starting falling in March as motorists paid more at the pump; that trend was reinforced by industry and government studies released this week. This led most of the oil investors to go for the exit leading to a drop in its stock value.
No comments:
Post a Comment