Crude oil falls 7 on economic worries

by Shane
(UK)

While President Obama signed the $ 787 billion stimulus package dollars, economic worries weighed on crude oil prices, which fell nearly seven percent on Tuesday.

NYMEX Light crude shed $ 2.57 to $ 34.94 a barrel on Tuesday, meanwhile, London Brent crude was $ 2.24 lower to $ 41.04.

It seems that a number of analysts is worried about the specter of deflation, as demand for factory continues to fall, the real estate market continues to sink and unemployment increases by about 15 million Americans now work.

According to data from the DoE, crude oil inventories are now about 350.8 million barrels, which is at the top of the range for this time of year.

After suffering a shock of huge demand, with prices falling from the top of last July to about $ 147 to $ 35 today, the crude oil market is looking to see what further action will OPEC.

The oil producers ' cartel said on many occasions, pointing at a price of about $ 70 per barrel and announced cuts of about 4 million barrels per day.

The Saudi Arabia expressed concern that its economy may grow may suffer if crude prices remain at current levels and do not approach their preferred plan of approximately $ 70 per barrel.

There is always a matter of compliance within Opec and we need to see if all its members have continued the agreed reductions in Conference-Vienna and Oran last October and December respectively.

Despite the cuts agreed the price of oil still seems to be falling and there is also speculation that Opec might have to seek a further cut of say 1. 5 to 2 million barrels per day.

It was only a couple of weeks ago that there were amazing contango profits to be made by the purchase of crude oil and store the physical commodity tankers and anchoring these off.

Even with the cost of leasing and insurance there were useful in a phase of more than $ 12 per barrel, and when you consider that these carriers can hold a million or two barrels, i.e. serious money.

Now, however, these contango large profits have gone into and the spread between futures and spot prices is only about $ 2-$ 3 per barrel.

Although these stocks are issued by tankers, supply closer by Opec cuts should see prices firming in the coming months.

Yet while the lower price of crude is a reflection of weakening global economic growth, this seems to be useful to some of the emerging markets, where Governments to subsidize the price of crude oil.

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