OIL – ALL’S NOT WELL
The southward movement of oil prices continues. NYMEX crude slipped last week below $52 a barrel before rebounding to $53 on Friday. While mild weather has been the prime driver in the recent downward movement, future direction will depend on a host of forces, including the stance OPEC is going to take (also the OPEC’s capacity to deliver production cuts and influence prices - OPEC's credibility has been on the wane), hedge fund speculators (a number of funds are taking short positions, on bets that prices will fall) and the strength of the global economy (which will affect the demand going ahead). Also on the market’s radar will be the geo-political developments especially in the middle east, though worst of the fears are already discounted.
The prices are expected to go below $50 very soon. Some analysts are even predicting the drop to extend to $40 a barrel, a price not seen since 2004. Crude oil has been in an eight-year bull market until last summer’s high above $78 a barrel. In 1998, oil traded as low as $10.35.
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2 comments:
Nice write up my friend!
Definitely, Oil's not well with oil...
The prices of a barrel of oil is acclerating like a car driven by an alcoholic. The worrying trend is, it hardly shows any signs of recession [ I agree, it came down to 52$ a barrel ]
But the effect of these oil cartels' machinations on the world economy is simply blown out of proportion, it is playing havoc.
Our own inflation rate has surged to 6.11% and our Oil companies incur daily losses due to the subsidised rates at which certain commodities, like Kerosene, are sold.
And the effluvium is literally choking our planet, countries which observe the Kyoto protocol too bear the brunt of the deteriorating conditions because of the indifference of a few nations.
It's time to harness other souces...
Have a good day.
Thanks Sanketh for your insight. Yes, I agree with you - it's very critical for meeting future needs of humanity that alternative sources are tapped. It's just the myopia of the business and political establisments that enough resources are not being spent on research in this direction.
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