Weekly Review and OpenBook Roundup
(eToro Blog) . For the week ending August 24, the price of Brent crude oil fell well below the benchmark $115 per barrel in Asian on Friday. This was brought on by ongoing global weakness, spurred by easing the US Federal reserve, and continued worries over European debt crisis. This resulted in diminished confidence in the outlook for demand. Across the Atlantic, a fourth week of gains in the price of oil continues to take root, owing to production cuts in the North Sea, and ongoing sanctions on Iran. In Japan, Mitsubishi Corporation risk manager, Tony Nunan, alluded to the fact that the global economy is in poor shape…. Europe too, alongside China and the US are sputtering, resulting in a weak demand for Brent crude oil.
By 6:07 GMT, the price of Brent October futures had dropped by $.46 per barrel to $114.55. In the US, Brent crude oil eased $.61 to just under $96 a barrel – a 0.4% decline in almost a month. This puts the price of Brent crude oil close to the support level of $95.61 per barrel, a crucial barrier which would otherwise pull the price down to $93.95 a barrel. Across the southern United States, a series of tropical storms and hurricanes are likely to make landfall, with potential for devastating consequences. The ongoing malaise in the European economy, and indeed the global economy has been pulling down on stock prices. The Eurozone (and its 17 countries) appears certain to be heading towards its second recession in 3 years. And in Asia, the continuing contraction in the Chinese factory sector has been the greatest in over 9 months this August.
In the continental United States, growth remains poor, with small increases in unemployment. Investors were surprised by the poor performance in the USA, as a result of the increasing jobless claims. The slight spike in the price of crude oil in Asia, was dampened by a series of mixed signals from the US Fed officials. The mixed signals were reflected in the statements made by the St Louis, Federal Reserve President James Bullard (with a positive outlook), and those of the Chicago Fed President Charles Evans (who alluded to a lot of reasons to do more). In his opinion, the ongoing high unemployment remained a worry, and the fact that growth would be just under 2% over the next 18 months. In the Middle East, ongoing tensions between the Western powers and Iran remain the key focus. The Islamic nation is threatening to block the Strait of Hormuz – a vital waterway through which 17 million barrels a day moved in 2011. Iran insists that its nuclear programme is for peaceful intent while the Western powers insist that it is for the development of nuclear weapons. A crippling series of sanctions have been levelled against the reigning regime in the hopes of dissuading it from continuing its proliferation of nuclear potential. As such, the U.S. Navy will be redeploying’s one of its aircraft carriers to the Middle East.
The Social Trading Community at eToro
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