Oil falling but for how long?
By SmallStocks on Aug 26, 2008 in ASX
Oil prices fell again on Friday with signs that investors are pulling their money out of commodities and back into shares. There is a growing belief that we have seen a peak in the price of commodities and that the signs of moderating global demand are starting to hit home. With a slight jump in the US dollar the price of crude oil fell to $US115 a barrel on Friday.
During the days trade, crude dipped as low as $US114.90, with some analysts suggesting that a move below a level of $US117 that oil’s recent slide is more than a brief pullback. Delivery fell $US4.82 to settle at $US115.20 a barrel on the New York Mercantile Exchange - its lowest settlement since May 1 where it settled at $US112.52. The Dow Jones industrial average was left up more than 300 points as oil suffered a week’s loss of nearly $US10 a barrel.
The big thing to watch out for this week is the fact that Russia has invaded Georgia. It is a little known fact that approximately 1% of the western worlds oil runs through a Georgian pipeline and if armed conflict continues between Russia and Georgia then the risk of this pipeline being damaged increases dramatically. This may put new pressure on oil prices and consequently renew a price increase in the price per barrel.
