The world is not a very certain place at the moment when it comes to commodity prices, oil, gold etc all wildly jumping about as new data creates either good or bad vibes in the market places and trading houses around the world.
Here the Wall Street Journal report on the fact that the oil prices are down 3 – 4% around the world, blaming this in part on the sluggish USA economy. There is more to it than that however I am sure, the fact that just about every country seems to be spending more than they are earning at the moment, surely worrying just about everyone.
Still I’m sure that the turnabround will come soon. In the meantime, here is that news from WSJ.
LONDON—U.S. crude prices fell more than 4% and Brent crude was down more than 3% Thursday as equity markets in Europe and Asia tumbled after the U.S. Federal Reserve said the economy of the U.S., the world’s largest oil consumer, faces “serious downside risks.”
Late morning in London, the November Brent contract on the ICE futures exchange was down $3.48, or 3.1%, at $106.88 a barrel. The November contract on the New York Mercantile Exchange was down $3.74, or 4.4%, at $82.18 a barrel.
The Fed’s downbeat language in a statement late Wednesday spooked investors, raising fears that a weaker U.S. economy would likely lead to lower oil demand. U.S. crude benchmark Nymex crude, which is more sensitive to news from the U.S. than Brent, fell 4.7% at one point, touching a one-month low of $81.86 a barrel.
Front month Brent fell 3.6% to a one-month low of $106.39 a barrel.
The fresh move by the Fed was intended to bolster the U.S. economy, but investors viewed it as “disappointing,” said Andy Sommer, an oil-market analyst at EGL.
“There were rumors that the Fed might announce some additional government bond buying, especially at the long end of the maturity curve, which would bring down interest rates, and that would stimulate the U.S. economy,” he said. “But they didn’t announce that, so some of these hopes we priced in yesterday are coming down today.”
The announcement by the Federal Open Market Committee late Wednesday led to a heavy selloff in global equities and boosted the value of the safe-haven dollar against the euro. A stronger dollar typically weakens crude prices because the dollar-priced commodity becomes more expensive for holders of other currencies.
European stocks dropped further into the red early Thursday after data showed that euro-zone manufacturing figures for September were lower than in August. With the pessimistic view on the U.S. economic outlook and fears about the euzo-zone debt crisis, crude-oil futures are likely to stay negative for the rest of the day, analysts said.
“Crude oil is under serious pressure,” said Myrto Sokou, an analyst at Sucden Financial. She said Nymex November crude could test $80 a barrel by the end of the week, and Brent November crude could test $105 a barrel.
See the full story on the oil price from the Wall Street Journal.