Crude Oil Prices Caught Between Demand Problems and Supply Worries
Crude oil prices slipped over the weekend and leveled off after a rapid spike caused by supply worries last week. This decline correlated with speculation about news out of the eurozone this week and investors' ongoing worry about demand in the face of global economic issues.
Germany is set to release data about its industrial production, which many are expecting to be down by about 0.6 percent. This coupled with recent trouble in Spain, Greece and France is causing investors to keep a cautious eye on the region.
More concern over future demand came out of China last week as well, as data reports showed the country's economic growth grinding to a halt. Reuters reported Monday that the World Bank reduced its growth forecast for East Asia and the Pacific. This came after the Australian dollar dipped to its lowest rate in three months last week. The World Bank also forecast that stunted economic growth in China may get worse in coming months, and could last longer than originally expected.
Brent traded at 111.700 on Monday, down by 1.030, a reflection of these ongoing demand worries. However, the losses caused by European data and a Chinese slowdown have been mitigated by worsening supply concerns as well.
The relationship between the West and Iran remains tense as it continues to develop a nuclear program against the wishes of the United Nations. The sanctions already in place to discourage the program have created an unstable Iranian economy, but have done little to impede nuclear development. Now, the US and Europe are discussing additional sanctions to further pressure the country to put a stop to the nuclear program.
In Syria, Turkey launched its fifth day of cross border fire in response to violence spilling over Syrian borders and killing five civilians in a border town in Turkey. The escalated violence put a spotlight on the region, and the possibility that Syrian troubles could destabilize the entire region.
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