Financial Investments

NYMEX crude oil futures ended lower on Fri 27 May 2010, posting the worst monthly decline since Dec 2008 at the height of the financial crisis, as a downgrade of Spain’s credit rating sparked further euro zone worries and prompted oil traders to seek less risky assets. The day’s retreat from a heady rally the day before accelerated past midday as Wall Street dropped sharply following news of the Fitch ratings agency’s downgrade, stoking more worries that the euro-zone debt crisis would stifle global economic growth. NYMEX crude oil prices slid from $75.72 on disappointing consumer spending data and a report that business activity in the Midwest fell this month, overshadowing other reports that incomes rose and consumer confidence edged up.

- The sharp rise in crude oil prices in the past few sessions has been breathtakingly steep, but I’m not really buying it.

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US crude oil futures rallied for a third session as escalating violence in Libya sparked supply worries. On NYMEX, crude oil prices for April 2011 delivery were at $100.64. It traded from $98.50 to $103.41. In London, ICE Brent was at $114.89 after trading from $111.83 to $119.79. Speculation that the Libyan unrest could spread to other big oil producers in the Middle East and North Africa again spurred buying, traders said. The violence in Libya has cut at least 400,000 barrels per day of that country’s 1.6 million bpd output. The upheaval in Libya, which holds Africa’s largest proven oil reserves, has ignited fears of an inflationary spike and hitting industrial commodities.

- I hadn’t had the chance to say this to my friends and colleagues for a while now, but here we are : “Welcome back to $100 oil”.

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