Monday, October 13, 2008

Oil Prices Rise on Enthusiasm, not Fundamentals

Oil prices increased by $3.49 to end the session at $81.19 a barrel for November delivery, as leaders presented a unity to the world in an effort to shore up confidence in the global marketplace. Oil basically rose on that euphoria, rather than any change in fundamentals.

Brent North Sea crude in London gained close to light sweet crude in the U.S., as it increased by $3.37 a barrel to $77.46.

Even so, the slowing demand for oil hasn't changed, and nothing, other than the possibility that the emergency meeting by OPEC next month may result in resistance to downward price pressures, will stop the price of oil from continuing to fall. They would attempt to do that by lowering production levels.

If they were to do that, there would probably be significant international pressure for them to keep production levels close to where they are.

In other financial news, the Dow Jones Industrial Average recorded its highest one-day point gain in history, gold continues to fall, and the U.S. dollar fell against many major currencies, even though an unprecedented unlimited dollar fund auction will be held by the central banks of several nations.

No comments:

Post a Comment