Current Oil Prices Fall on Weak Economic Growth

Concerns regarding the economy’s weak growth pulled down the current oil prices. The current oil prices reflect a fall in five out of the past six trading days. Last week, it declined by almost 6 percent.

In the NYMEX, the crude oil price per barrel of the U.S. benchmark lost 1 percent, or 96 cents, to end at $91.93. The cost of other petroleum commodities also fell. In London’s ICE Futures Exchange, the crude oil price per barrel of Brent shed $1.61 to $109.81.

Germany gave the latest piece of bad news about the economy with one of its key confidence indices having fallen for 5 months now. Germany is a strong economy however, with nearly half of its export economy tied to the rest of Europe.

Moreover, growth is slowing down for 16 other nations in the eurozone. Weaker economies mean low oil demand consequently pushing prices lower.

Phil Flynn, Price Futures Group’ senior market analyst, expressed surprise that the current oil prices have not dropped further. He attributes that to the commodity funds that haven’t yet been bailing out of oil.

Still, oil prices are faced with pressure from concerns regarding Europe. The U.S. currency has been stronger, making crude cheaper for those holding other currencies.

Elsewhere, demand destruction is being witnessed globally. Saudi Arabia’s commitment to offer additional oil is a key example: all of that push oil prices lower.

The lower prices of oil are quite good for motorists in the United States. The daily poll of the Wright Express, AAA and OPIS shows that the average gasoline price shed almost 2.5 cents over the weekend, to $3.808 a gallon.

Elsewhere in the energy markets, the price of natural gas lost 4.8 cents to end at $2.837 per thousand cubic feet. The cost of heating oil shed 2.2 cents to $3.0987 a gallon. The price of wholesale gas declined by 2.49 cents to $2.9176 a gallon.

By: Chris Termeer