Investors in the Oil futures are breathing a heavy sigh of relief. The Price of oil had reached its 13 month bottom at $77.70 on Friday on the panic of last week’s stock market decline. But in world trading this week, benchmarks from around the world have proven that you can’t keep oil down, bolstering the mark for light sweet crude on the New York Mercantile Exchange was up $3.37 to $84.56 a barrel in electronic trading by midday in Europe. The price closed at $81.19 on Monday.
“The bailout announcements have eased some of the deep-seated fear of a global meltdown and instilled a degree of confidence in markets,” said Peter Luxton, analyst at Informa in London. He speculates that oil prices are unlikely to rally much higher in coming days as doubts over global demand in the longer-term remain very much on traders’ minds. “The outlook for oil prices is still very much bearish as the risk of global recession — or at least a global slowdown — remains,” said Luxton, who expects prices to drop to the $60 to $70 a barrel region next year.
The plans enacted by world leaders have calmed investors and instilled confidence in the trading systems. U.S. plans to spend an initial $250 billion of the $700 billion bailout has successfully quieted the rush of panic heard on the street last week. We can look forward to a new course of action to be announced by President Bush Tuesday.
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