SPECULATION

World Watch reported oil futures fell Thursday, slipping below $90 at times and reversing five days of gains on renewed recession worries sparked by dismal government reports on consumer spending and employment in the US.
A sharp downturn in the stock market on concerns about the economy and that municipal and corporate bond insurers may face debt downgrades also weighed on energy prices.
It’s the economic reports or better known as SPECULATION that are causing a lot of pressure (on prices) right now !!!
Light, sweet crude for March delivery fell $2.45 to $89.88 on the New York Mercantil Exchange.
Through Wednesday, oil prices had risen $5.34 a barrel, or 6.1 percent, over five trading days on optimism that the Federal Reserve’s rate cuts and an economic stimulus package working its way through Congress will stave off a serious downturn. But many investors doubt the plans will work.
Stocks, meanwhile, slid Thursday on the economic news and after bond insurer MBIA Inc. reported a large loss, raising the prospect of a round of downgrades in the bond insurance industry. Energy investors often view stocks as a proxy for economic growth, worrying that if the economy slows, demand for oil and gasoline will shrink.
So for now we have a pretty strong tie-in between movements of the oil market and the equities markets !!!
Energy investors also continued to digest Wednesday’s Energy Department report showing that crude oil and gasoline inventories jumped more than expected last week, they are at their highest levels in nearly two years.
Demand for crude fell last week, and many observers expect further demand deterioration as the US economy slows.
In London, Brent crude futures lost $2 to $90.53 a barrel on the ICE Futures exchange.
Oil traders are also awaiting Friday’s OPEC meeting at which Organization of Petroleum Exporting Countries ministers are expected to hold production steady.
In London, Brent crude futures lost $2 to $90.53 a barrel on the ICE Futures exchange.