Friday, October 3, 2008

Oil Joins Other Commodities in Steep Losses

After dropping by $4.56 yesterday, oil futures continued to plunge in after-hours trading, falling another 1.2 percent to as low as $92.81 on the New York Mercantile Exchange.

Other commodities have been struggling as well, as the Reuters/Jefferies CRB Index of 19 commodities was down to its lowest level in close to a year, with corn, copper and silver especially losing; all of them in their worst weekly drop in over 20 years.

For the week oil is down 13 percent, as concerns of demand continuing to fall because of fears about the poor economic conditions. The report by the Labor Department showed jobless claims for the week ending September 27 are their highest since September 2001,

Since the high of $147.27 on July 11, oil has fallen by 37 percent.

The use of fuel in the U.S. also fell to its lowest level since October 2001, averaging only 19 million barrels a day.

With the economic news seemingly getting worse by the day, there are an increasing number of people questioning the validity of spending $700 billion on a bailout that probably will make no difference at all, and in will all likelihood make the problems last longer than if we would just let it work its way through the market.

As far as gasoline prices, we're seeing them drop, but they're lagging behind the decline in oil prices as it's taking a little time for refineries to get back on line. Once that happens we should see gas prices start to mirror more closely the oil price drops.

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