Wednesday, July 08, 2009
Wednesday, 08 July 2009
Oil prices slid on Monday to a five-week low after reaching an eight-month high above $73 last week. Light, sweet crude for August delivery on Monday fell $2.68 to settle at $64.05 a barrel on the New York Mercantile Exchange.The sentiment of optimism have changed in the market after last Friday’s figures of U.S. unemployment were much worst than expected signaling the world’s largest energy user remains mired in recession. The U.S. unemployment rose to the highest in almost 26 years.This figures gave the opportunity for a new round of speculative action in oil market as investors pulled money from investments that could get hurt if the economy doesn't rebound as soon as hoped. Now the majority of investors believe that the economy will take longer to recover than some investors have been betting.
According to analysts estimates, the market will return to the basic fundamentals and this will probably will push crude oil prices to even lower prices. "The momentum has really turned around...the market is trying to go back to fundamentals," said Christoffer Moltke-Leth, head of sales trading of Saxo Capital Markets at the Wall Street Journal. Oil prices might move lower before finding some support around $60 a barrel, he added.
For the near future market’s attention turns to the figures about U.S. oil inventories. Analysts polled by Dow Jones Newswires said they expect the forthcoming Energy Information Administration data will show crude stockpiles likely fell by 1.9 million barrels last week, while gasoline stockpiles climbed by 800,000 barrels and distillates rose by 1.7 million barrels.
But as the majority of analysts admit, forecasting oil prices has become a very difficult, and dangerous, history. The extreme volatility that has gripped oil markets for the last 18 months has shown no signs of slowing down, with oil prices more than doubling since the beginning of the year despite an exceptionally weak economy.
The instability of oil and gas prices is puzzling government officials and policy analysts, who fear it could jeopardize a global recovery. It is also hobbling businesses and consumers, who are already facing the effects of a stinging recession, as they try in vain to guess where prices will be a year from now — or even next month.
Volatility in the oil markets in the last year has reached levels not recorded since the energy shocks of the late 1970s and early 1980s, according to Costanza Jacazio, an energy analyst at Barclays Capital in New York.
Makis Theodoratos, Hellenic Shipping News