MARKET WATCH: Energy prices drop on concerns for European economy
20.05.12
Crude oil prices declined across the board Dec. 28, giving back most or more than the gains from the previous session. In New York, the front-month crude contract dropped below $100/bbl as traders worried more about the troubled European economy and less about Iran’s threats to close the Strait of Hormuz.
Marc Ground at Standard New York Securities Inc., the Standard Bank Group, said, “Not only have concerns been raised about Euro-zone demand, but US demand for crude oil also has been brought into question as gasoline consumption figures dropped, according to Department of Energy reports. Oil also lost support as worries over an Iranian blockade of the Strait of Hormuz eased.”
The euro fell sharply to the lowest level since the start of this year compared with the dollar and to a 10-year low against the yen. “The dollar index is now back to the levels of August 2010—in other words, all the dollar debasement linked to QE2 [the Federal Reserve Bank's second quantitative easing program] has been wiped out. The flat price of crude oil came off with the rise of the dollar, but that still does not make any strong difference for European consumers. In euros, the price of oil is still near record levels and crude oil in dollars still has to fall a lot more before it starts to have any positive impact on European consumers,” said Olivier Jakob at Petromatrix in Zug, Switzerland.
Source: Oil & Gas Journal