1. Oil and the Global Economy
Oil prices continued to slide until Friday when a new report indicated that active drilling rigs in the US were dropping rapidly and that shale oil production was likely to drop later this year. The report triggered a wave of short-covering in New York that sent prices up 8.3 percent to close at $48.24 after trading as low as $43.58 a barrel, the lowest since March 2009. London’s Brent was not far behind, climbing 7.9 percent on Friday to close at $52.99 for the biggest one-day gain since 2009.
In addition to Friday’s rally, last week saw a number of other developments most of which suggested that oil prices may fall still further in the short term. US economic growth slowed to 2.6 percent in the fourth quarter from the 5 percent pace seen in the third; US crude stocks rose by 8.9 million barrels the week before last to 407 million, the highest level in 80 years; several major and numerous smaller oil companies reported lower earnings or announced major cutbacks in capital expenditures during the coming year; and US CEO’s are more pessimistic about corporate earnings at any time since the 2008 financial crisis.
Oil prices continued to slide until Friday when a new report indicated that active drilling rigs in the US were dropping rapidly and that shale oil production was likely to drop later this year. The report triggered a wave of short-covering in New York that sent prices up 8.3 percent to close at $48.24 after trading as low as $43.58 a barrel, the lowest since March 2009. London’s Brent was not far behind, climbing 7.9 percent on Friday to close at $52.99 for the biggest one-day gain since 2009.
In addition to Friday’s rally, last week saw a number of other developments most of which suggested that oil prices may fall still further in the short term. US economic growth slowed to 2.6 percent in the fourth quarter from the 5 percent pace seen in the third; US crude stocks rose by 8.9 million barrels the week before last to 407 million, the highest level in 80 years; several major and numerous smaller oil companies reported lower earnings or announced major cutbacks in capital expenditures during the coming year; and US CEO’s are more pessimistic about corporate earnings at any time since the 2008 financial crisis.
No comments:
Post a Comment