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Crude Oil Price forecast all over the world lampoenk
Oil prices are falling, as traders dial back their expectation for the global demand for oil. But drivers are still waiting for the price of gasoline to drop as well.
The price of oil closed on August 9 at about $79 a barrel – the lowest since last September.
Crude oil prices were on the rise in the beginning of the year. Unrest in the Middle East put pressure on supplies, and traders had a more optimistic outlook about the demand for oil, explains Richard Soultanian, an oil industry analyst with NUS Consulting Group.
“If the economy’s going to grow and there’s lots of money around, that means people are going to use more of everything — more copper, more silver, more oil, more gasoline. So [traders] started to bid the price of all that up,” Soultanian says.
Those initial forecasts for growing economic activity eventually fell apart. The price of crude started to dip in late spring, but it plummeted in recent days. According to Soultanian, slower-than-expected growth in the U.S. economy and an unstable stock market after the degrading of the federal government’s credit rating have been a stark reality check for oil traders.
“The economy is much weaker than people expected,” Soultanian says. “The global markets are very concerned about the possibility of another financial crisis.”
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The Dow Jones Industrial Average plunged to an 11-month low as investors were squeezed between fears of further contagion among European banks and the Federal Reserve’s gloomy economic outlook.
[0810trader]Associated Press
Specialist Stephen Steinthal works at his post on the floor of the New York Stock Exchange Aug. 10.
The blue-chip Dow fell 519.83 points, or 4.62%, to 10719.94 on Wednesday, more than reversing the previous day’s exuberant gains. The Standard Poor’s 500-stock index slid 51.77 points, or 4.42%, to 1120.76 and the Nasdaq Composite lost 101.47 points, or 4.09%, to 2381.05.
The major indexes’ declines off their Apr. 29 highs now exceed the magnitude of the losses during the summer of 2010. The SP 500 has fallen 18%, more than the SP fell 16% between late April and early July 2010.
On Wednesday, all 30 of the Dow components and all 10 of the SP 500 sectors were in negative territory, with just 11 of the SP 500 components finishing in positive territory. In a reflection of investor concern, the CBOE Market Volatility Index, the “fear gauge” known as the VIX, surged 23%.
“The market can go from euphoria to depression at the flick of a switch,” says Chris Brown, portfolio manager of the Pax World Balanced Fund, with $2 billion in assets under management. “People are concerned about France’s ratings, and the banks are under an extreme amount of pressure.”
Leading the declines were financial stocks, with Citigroup falling $3.33, or 10%, to $28.49; Bank of America off 83 cents, or 11%, to 6.77; J.P. Morgan Chase down 2.03, or 5.6%, to 34.37; and American Express shedding 3.30, or 7.2%, to 42.80.
Walt Disney was the steepest decliner among the Dow components for most of the day, tumbling 3.16, or 9.1%, to 31.54 after the blue-chip media and entertainment conglomerate reported results that topped analyst expectations, but raised analyst concerns about decelerating advertising rate growth.
“This is a market run on emotions and headlines, and the price moves are exacerbated by high frequency traders,” said Sal Arnuk, co-head of equity trading at Chatham, N.J., brokerage Themis Trading. “It’s definitely not for those with a weak stomach—all those clichés stand.”
“We just have not built any confidence,” said Jeffrey Friedman, senior market strategist at MF Global. “The Fed came out yesterday and tried to appease everyone and say we’re on top of this, we’ll give you a date, we’ll keep interest rates low for two years. But that means nothing. People have lost confidence in Washington, D.C. This is a rejection of that Bernanke statement.”
In Europe, stocks fell broadly as worries continued to surround Italian and Spanish government bonds, as well as some banks on the Continent.
The European Central Bank bought Italian and Spanish government bonds for a second day in a row, stabilizing borrowing costs for both countries and easing concerns for the moment that Europe’s debt crisis will spread to its larger countries.
In Italy, a number of stocks were halted as its FTSE MIB tumbled 6.7% to lead the major market declines in Europe. The Stoxx Europe 600 fell 3.8% while France’s CAC-40 index fell 5.5% and Germany’s DAX fell 5.1%. For France’s CAC, the decline was the 12th in 13 sessions and was the largest one-day decline since Dec. 2008.
The declines came after French President Nicolas Sarkozy interrupted his summer holiday to meet his cabinet, pledging to consider fresh tax rises, spending cuts and other budget measures to ensure the country doesn’t deviate from a challenging deficit-reduction trajectory.
French-listed shares of Société Générale SA tumbled 15% leading declines across a broad swath of lenders in Italy, Spain and France. Crédit Agricole SA shed 12% and BNP Paribas SA lost 9.5% in Paris, while Intesa Sanpaolo SPA dropped 14% and Banco Popolare SC fell 9.4% in Milan. In Madrid, Banco Santander SA finished down 8.3%.
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