Oil Plunges $10 Per Barrel
Kurt Brouwer September 29th, 2008
My wife and I were sitting quietly on the ledge talking about stock market activity tonight. Just kidding about the ledge part, but we were talking about recent events and she did make a good point about two trends that have gone largely unnoticed.
She pointed out that the dollar was soaring and oil prices were tanking. Had anyone told us that the dollar would be in a strong rally versus the Euro by October and that oil prices would be well under $100 per barrel, we would have cheered. And, inflation is slowing rapidly too. It’s all good, right?
Well, not exactly. But, we can at least point to this good news on oil as a relief from the rest of the financial news:
Oil plunges $10 as U.S. bailout plan voted down (Associated Press/Yahoo, September 29, 2008, Stephenson Jacobs)
Oil prices tumbled more than $10 a barrel Monday, dropping back below $100 as a U.S. financial bailout failed to win legislative approval, raising fears of a prolonged economic downturn that could drastically erode global energy demand.
Light, sweet crude for November delivery sank $10.52, or 9.8 percent, to settle at $96.36 on the New York Mercantile Exchange, after earlier dropping as low as $95.04.
The dramatic sell-off capped a week of frenzied volatility in oil markets.
A week earlier, prices shot up over $16 to $120.92 a barrel in the biggest one-day dollar gain ever. But as disagreements over the government’s $700 billion bailout plan intensified over the last several days, oil market traders began moving out of their positions at a rapid clip; Monday’s decline was the second largest ever in dollar terms and the biggest percentage-wise since 2001. Crude has now fallen almost $25, or 20 percent, in the last seven days.
…”This is an acknowledgment that the global slowdown is here and energy demand is not going to be what it was,” said Phil Flynn, energy analyst at Alaron Trading Corp. in Chicago.
...Energy consumption overseas is also expected to drop, even in fast-growing developing countries such as India and China, where booming demand for cars and other goods helped drive the oil bubble earlier this year.
“With demand falling at the pace it is, nothing can support crude at levels above $100,” said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com. “There’s no underlying demand from any pocket.”
Other commodities also traded sharply lower Monday as investors bet that a widening economic malaise will swallow demand for building materials, grains and other goods.
Highlighting weak U.S. appetite for energy, pump prices kept falling Monday. A gallon of regular slipped about a penny overnight to a new national average of $3.643, according to auto club AAA, the Oil Price Information Service and Wright Express. Prices peaked at $4.114 on July 17…
- Economy , Personal Finance , inflation
- Comments(1)
Did you enjoy this article?
You know, I was thinking the same thing this morning…For those of us who blog about financial news on a daily basis, the 800 lbs. gorilla in the room, or shall I say the $700 billion dollar gorilla in the room, has really distracted us from other important factors such as oil prices and the strength of our dollar.
Way to pull us back to reality, I had almost forgot all about our economy outside Washington,
Nice post,
Tim