Crude Oil’s Slump
January 28th, 2009 Posted in In-Depth Analysis
The price of Crude Oil has slumped as of late, owing much of its misfortune to poor economic data releases and fears that demand will decrease for a 2nd consecutive year. Production cuts by the Organization of Petroleum Exporting Countries (OPEC) haven’t led to the desired results, according to the cartel. OPEC officials see the desired price of Oil at $75-$100 a barrel. They argue that any price below the lower band of this is unacceptable. In order for Crude to hit prices that were seen 6 months ago, then there will need to be a dramatic recovery from the global economic slump, led by the United States.
President Obama’s $825 billion stimulus plan is currently awaiting approval in Congress. When it does get approved, Oil prices are likely to make big, short-term gains. However, this won’t be enough to help prices of the black-gold recover in the medium-long term. Analysts foresee the current global economic slump to last through 2010. In the meantime, the only thing that governments and central banks can really do is pump money into economies, encourage private enterprise, and cut interest rates.
Since trading commenced on Monday, Oil prices have slid over $7 to $41.64. There are several things that may help the price of Oil rebound over the next couple of days. Firstly, positive economic news coming out of Europe and the United States. Secondly, a surprise announcement of an Oil production cut by OPEC. Thirdly, at 15:30 GMT, there is the release of U.S. Crude Oil Inventories. If the results are higher than forecasted, then the price of Oil is likely to decline further. However, if the figures are lower than estimated, then Crude prices may rebound in the short-term. To start making money in Oil and other commodities, you can open a standard account within minutes at ForexYard and begin trading today!
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Tags: black gold, Crude Oil, economic slump, interest rates, Obama, oil, Oil Slump, OPEC
