Tuesday, May 05, 2009
Oil Prices Gained 44,55% in the First 4 Months of 2009
Tuesday, 05 May 2009
The world economy is suffering from the worst recession in decades affecting the majority of business sectors including of course shipping companies. But, although the depressed demand for oil and energy generally, oil prices have rebounded strongly during the first four months of the year after the plunge of 60% last year. From the beginning of the year oil prices in New York have strengthen by 44,55% as they climbed from the level of $36,94 in January 1st to $53,50 on May 1st.
Oil prices ended above $53 a barrel last Friday for the first time in more than a month as new economic reports showed that the nation's recession may be easing. Light sweet crude for June delivery settled up $2.08 a barrel to $53.20 a barrel. Oil climbed as high as $53.65 earlier in the session. The last time oil settled above $53 a barrel was March 26, when oil ended the session at $54.34 a barrel.
The spark that oil market is looking for was found in improved consumer confidence and the dollar's weakness versus the euro. At the same time, some analysts underline that the recent rally in oil prices is a result of a technical breakout. “Officially” the uptrend in oil prices is market’s reaction to the positive news that U.S. consumers in April felt more confident about the economy than at any time since the Lehman Brothers failure in September, a University of Michigan survey said.
"This should push this market higher," said Nauman Barakat, senior vice president at Macquarie Futures USA, referring to the Reuters/University of Michigan Surveys of Consumers. A new report showed that the pace of decline in the manufacturing sector is slowing.
The Institute for Supply Management's manufacturing index rose to 40.1 in April from 36.3 in March versus forecasts for a rise to 38.4. Any reading under 50 indicates the sector is still contracting, but the rise showed that the contraction is not happening as quickly as before.
Other reports issued this week showed that consumer confidence was improving.
The University of Michigan's consumer sentiment index was revised up to 65.1 Friday from a previous reading of 61.9. Economists thought it would be unchanged. And Tuesday, the Conference Board's sentiment index climbed to 39.2 in April from an upwardly revised 26.9 in March.
The week's most important economic report - Gross Domestic Product - came out on last Wednesday. The government said that the U.S. economy shrank at an annual pace of 6.1% in the first quarter, much worse than the 4.7% drop that economists were expecting.
But the same report also showed that personal spending rose at an annual 2.2% rate, the first uptick since the second quarter of 2008. Business inventories plunged by more than $100 billion during the quarter, the biggest drop on record. Economists read the drop in inventories as a sign that businesses will have to ramp up production in coming months.
A new sense of optimism has been supporting Wall Street as well. Oil prices have tended to rise with the stock market in recent months, because Wall Street serves as a barometer for the health of the economy. In a healthy economy, demand for oil generally rises, sending prices up.
For the month of April, the Nasdaq gained 12.3%, the S&P 500 gained 9.4% and the Dow Jones gained 7.3%.
Makis Theodoratos, Hellenic Shipping News
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