Oil prices continue declines

The price of crude oil has fallen considerably over the course of today, continuing the declining price trend of last week.

Oil prices, which have fairly recently broken all time record highs, have been dramatically impacted upon by poor US economic performance, causing prices to decrease in the face of recent trends.

Worrying results from Wall Street, and prolonged underlying economy problems in the US have resulted in lower investor confidence, which has led to sell-offs in investment oil stock bringing the price per barrel down by in excess of $2.00.

Economic indicators from the US revealed continuing uncertainty as to the immediate direction of the economy, which was reflected in falling share prices across the world’s major stock markets.

The stagnant housing market has continued to bog down economic growth, whilst the sub-prime lending crisis remains at the forefront of the world’s media, and the US mortgage market.

US interest rates remain lower than most other major world economies, which have seen a trend towards interest rate rises as global stability and growth begins to take its toll on inflation.

Analysts attribute the lower interest rates to sluggish growth, and the continuing buyers market for US housing, with very little possibility of an upturn on the horizon.

After a week of mixed messages from think-tanks and analysts, markets have favoured a weaker interpretation of recent results.

Market confidence directly contradicts the Federal Reserve and President Bush, off the back of his positive comments as to the ‘resilience’ of the US economy, showing that perhaps the underlying concern as to the governance of the economy is having an adverse impact on growth and any potential recovery.

The price drops may have an impact on the decision of OPEC later this year, as they meet to discuss the regulation of pricing through world oil supply.

Discuss this in the Finance Markets forums

Story link: Oil prices continue declines