Posts Tagged “Oil Prices”
Source: Reuters
The “nasty” U.S. recession will tighten its grip next year as unemployment rises and weak home and stock prices imperil consumers, finance firms and debt-laden businesses, a UCLA Anderson Forecast report released on Thursday said.
Additionally, a sustained retreat in prices for goods and services is a very real possibility that would further drag on the economy, according to the forecasting unit’s report.
“Where only last quarter we were worried about inflation, we are now worried about its very rare opposite: deflation,” the report said. Falling prices would cut demand and discourage employers from hiring.
“The record collapse in oil prices has brought with it welcome relief to motorists throughout the country and an effective tax cut of $440 billion in the form of a lower oil import bill,” the closely-watched report said. “Nevertheless the swift fall in oil prices is now lowering the absolute level of consumer prices and bringing with it likely declines in nominal GDP over the next three quarters.”
Where the forecasting unit in summer had projected a “subprime” outlook for the U.S. economy through the end of next year with growth at just above 1 percent, it now sees the economy facing a winter of discontent.
“The news from the economy is bad,” the report said. “The recession that we had previously hoped to avoid is now with us in full gale force.”
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Posted by: Joshuah in Energy, tags: Oil Prices
Source: FT.com
Oil sank to fresh 20-month lows on Wednesday, extending the previous session’s retreat below $60 a barrel, as fears over the global economic outlook intensified after the World Bank revised down its growth forecasts for developing economies, citing turmoil in financial markets and slower exports.
Nymex December West Texas Intermediate lost $1.23 at $58.10, its lowest level since March 2007, before steadying slightly to trade at $58.51, still 83 cents lower than in the previous session.
ICE December Brent also slid for a second session, down 62 cents at $55.08.
On Tuesday, the World Bank cut its 2009 growth forecast for developing countries to 4.5 per cent, from a previous projection of 6.4 per cent. The bank warned that even this scenario could be optimistic, and added that some developing countries could face negative growth.
The bank also predicted that developed economies would contract 0.1 percent next year, while overall, the world economy would manage only one per cent growth.
Since its record peak of $147.27 in July this year, the price of crude oil has dropped 60 per cent, as the global economic downturn has weighed on demand for energy.
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Posted by: Joshuah in Energy, tags: Oil Prices
Source: FT.com
Oil prices will rebound to more than $100 a barrel as soon as the world economy recovers, and will exceed $200 by 2030, the International Energy Agency will say in its flagship report to be published next week.
“While market imbalances could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over,” the report states.
The developed world’s energy watchdog has doubled its long-term price expectation from last year’s $108 a barrel for 2030 and assumes oil prices will rebound from today’s $60-$70 a barrel to trade, in real terms adjusted by inflation, at an average of more than $100 a barrel from 2008 to 2015.
The IEA’s World Energy Outlook has come to this conclusion largely because it believes companies will struggle to pump enough new oil to offset the steep production declines of the world’s older fields.
“Current global trends in energy supply and consumption are patently unsustainable,” the report states.
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Source: FT.com
Commodities were hammered for the second day running with oil prices falling below $90 a barrel as investors rushed to unwind trading positions in crude amid worries about AIG, the US insurer and the sponsor of a large commodity index.
West Texas Intermediate prices tumbled more than $5 to an intra-day low of $90.51, firming $4.56 lower at $91.15, leading a broad sell-off in base metals and agriculture commodities.
The DJ-AIG commodity index is the second most popular in the asset class, with pension funds and other large investors investing some $30bn in derivatives that track the benchmark. The index fell 2.7 per cent to its lowest level since September 2007.
Bankers said while AIG had not provided all that exposure to the index through derivatives for clients, it was a counterparty for a “significant amount”.
Bankers said investors had moved about $10bn since Monday – more than 5 per cent of the funds tracking commodity indices – because of concerns over counterparty risk from several institutions.
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Source: FT.com
Oil prices fell sharply for a second session on Tuesday, leading a broad retreat across commodity markets as risk aversion continued to dominate trading following the collapse of Lehman Brothers and uncertainty over the future of AIG.
Investors cut their positions and headed for the safety of cash.
AIG, the troubled US insurer, also has a significant presence in commodity markets through the Dow Jones AIG Commodities Index.
Robin Bhar, senior metals analyst at Calyon, said: “Commodity prices are likely to drift lower as the fundamentals just do not matter for the foreseeable future.
“The ongoing credit crunch, uncertainty and lack of confidence are likely to see a further erosion of prices.”
Nymex October West Texas Intermediate sank $3.50 to $92.21 a barrel after touching a low of $90.55, while ICE October Brent fell $4.24 to $90 a barrel after sinking to a low of $88.99.
Constanza Jacazio, of Barclays Capital, said the disruption by hurricane Ike to US refineries on the Gulf coast was being underestimated by the market.
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Posted by: Joshuah in Energy, tags: Oil Prices
Source: NYTimes.com
Shares on Wall Street turned negative Tuesday afternoon after the Dow Jones industrial average soared more than 200 points in morning trading after a decline in oil prices.
The gains were erased by the afternoon after shares of energy companies fell sharply, as investors bet that falling oil prices could hurt refineries and oil giants like Exxon Mobil and Chevron. The Dow closed down 26.63 points, to 11,516.92, while the broader Standard & Poor’s 500-stock index dropped about 0.41 percent or 5.25 points to 1,277.58. The Nasdaq declined 18.28 points, or 0.77 percent, to 2,349.24
The drop in oil prices dragged down the entire commodities sector, and initially lifted the stock markets as investors hoped that cheaper energy could nudge up consumer spending.
Crude oil futures fell to just over $105 a barrel in early trading, a five-month low, on Tuesday morning before climbing back slightly. Some investors had been concerned that Hurricane Gustav would disrupt refinery activity and oil supply chains in the Gulf Coast, but the storm passed over much of the region’s energy infrastructure.
“The storm, thank God, was not as bad as initially thought,” said Tom Bentz, an energy analyst at BNP Paribas in New York, which led investors to sell off their bets that the price of oil would move higher. Oil declined $5.75 to settle at $109.71 a barrel.
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