Oil prices bearish, but bulls may yet return
New York, August 9:
In less than a month crude oil, which some saw hitting $200 a barrel by year-end, has plunged $32 but a rebound could happen over the Iranian nuclear crisis.
From a record-high $147.27 on July 11, the New York futures contract slid to about $115 yesterday, losing almost 22 per cent in the course of four weeks. Most other commodity prices which were driven higher by the oil market surge fell from their peaks. An ounce of gold dropped to $800 from 1,000; farm commodity prices are 25 to 40 per cent lower and petrol by six per cent.
The slowdown in economic growth affects energy consumption. US drivers, known as huge consumers of petrol, drove a third less in May compared to a year ago.
The US witnessed an increase in its crude reserves in recent weeks. But problems with energy supplies could once again send prices skyward, analysts warn.
They point to the escalating tensions between the US and Iran over theTehran’s nuclear programme, which could threaten obal supplies. Antoine Halff of Newedge Group says.
Iran, the second-largest oil producer in the Organisation of the Petroleum Exporting Countries (OPEC) warned it would shut the Strait of Hormuz, where 40 per cent of the world’s oil exports transit, if its interests are threatened.
The explosion of growth in the Chinese and Indian economies and a rebound in growth in the other industrialised countries in 2009 could also stoke demand, pushing up the prices.