As many analysts and banks were forecasting $200 and even $500 as a price for a barrel of crude oil, we were stubbornly sticking to our prediction that oil prices will drop due to the worsening recession conditions, not just in the USA but around the world.
Senior business people tracking the economic progress will all privately tell you that GDP growth is anemic (<1%) or showing signs of dropping in a number of key benchmark countries. Which countries around the world are at risk of a hard landing, i.e. a sharp growth slowdown and an outright recession? The U.S., the U.K., Spain, Ireland, Italy, Portugal, Japan, Canada, New Zealand, Latvia, Estonia and a few other central-south European countries.
Today we see four more stories on the wire services that support that conjecture
- July 31 (Bloomberg) -- Canada's economy unexpectedly [to whom ?? –Walter Derzko]) shrank in May, as extraction of natural gas slowed and car production dropped, providing more evidence that industries are being hurt by weaker U.S. demand.
Gross domestic product fell 0.1 percent, the fourth decline in six months, to C$1.23 trillion ($1.2 trillion), Statistics Canada said today in Ottawa. Economists in a Bloomberg survey predicted a 0.2 percent gain, the median of 24 estimates. (…are most economists overly optimistic in the face of reality?—Walter Derzko )
- August 1, 2008 (AFP) OIL PRICES FALL FURTHER ON US DEMAND CONCERNS World oil prices fell on Friday as weak economic growth data in the United Statesreignited concerns about slowing demand in the world's biggest energy consuming nation, traders said. New York's main contract, light sweet crude for September delivery, lost 1.57 dollars to 122.51 dollars a barrel in electronic trading, after dropping 2.69 dollars on Thursday. Brent North Sea crude for September delivery shed 1.68 dollars to 122.30 on Friday, after shedding 3.12 dollars on Thursday. Concerns over the health of the USeconomy -- a major buyer of global exports -- has pushed crude down by more than 25 dollars since reaching record peaks above 147 dollars on July 11. "Sentiment is more focused on slowing demand rather than short-term supply disruptions," said Mark Pervan, a senior commodities strategist with ANZ Bank in Melbourne.
- August 1, 2008 (Bloomberg)
CRUDE OIL FALLS A SECOND DAY AS SLOWING ECONOMY DAMPS DEMAND By Nesa Subrahmaniyan and Grant -- Crude oil fell for a second day, extending the biggest monthly decline since 2004, on concern global consumption is falling amid slowing economic growth. Demand is faltering in the U.S., the world's largest energy user, where data due today may show the unemployment rate at its highest in four years, according to a Bloomberg survey. Manufacturing in China, the world's second-biggest energy consumer, contracted for the first time since a survey of purchasing managers began in 2005. ``The growing prospect of demand destruction in the U.S., and potentially other parts of the world, combined with technical indicators that suggest it's time to sell, is keeping prices under pressure,'' said Christopher Bellew, senior broker at Bache Commodities Ltd. In London. Crude oil for September delivery declined as much as $1.45 cents, or 1.2 percent, to $122.53 a barrel on the New York Mercantile Exchange. The contract traded at $122.69 a barrel at 9:44 a.m. London time.
- August 1, 2008 London (Platts)- CRUDE FUTURES LOWER AMID WEAK US DEMAND AND BEARISH TECHNICALS Global crude futures continued to fall in early European trading Friday, led by the deteriorating demand situation in the US, sources said. "The focus is on weak US demand," one analyst said. At 1037 GMT, the September ICE Brent contract traded at $122.78/barrel, down $1.20 from the overnight settle, while the September NYMEX contract was down $1.10 at $122.98/b. "The bearish fundamentals and technicals are reasserting themselves after a mid-week rally," a London-based broker said. "The overall momentum on crude oil has clearly changed from the dynamics of the first half of the year and this week even an attack on Nigerian pipelines or Iran not giving answers [about their nuclear program]... is not enough to provide sustained support," Petromatrix oil analysts said. The ICE Dollar Index firmed to 73.369 ahead of key US employment data due to be released by the Bureau of Labor Statistics later today.
Mid day Update (thanks to Mike Hollinshead, Alberta)
All of the 23 developed nations in the MSCI World Index except for Canada have experienced bear-market plunges of 20 percent or more since September as credit losses surged and record commodity prices stoked inflation. Brazil last week became the 23rd out of 25 developing countries in the MSCI Emerging Markets Index to enter a bear market. Only Jordan and Morocco avoided such slumps. The S&P 500 has declined 19 percent since its October record as financial institutions worldwide posted $480 billion in writedowns and credit losses stemming from the collapse of the subprime mortgage market. Equities also retreated as inflation increased, giving the U.S. consumer price index the steepest gain since 1991. Last Updated: August 1, 2008 08:36 EDT
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© 2005-2008 Walter Derzko -"Changing the world, one idea at a time"© ™
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