What caused it and what to expect
By some twist of fate or better yet rational expectations, not even a storm or missile tests could stop oil prices from dipping down. From a record $147 per barrel in July, oil prices are now around $115. Tropical storm Edoaurd slewed away from possible Texas gas platforms that could have tremendously retreated oil supply in the market. Iran’s refusal to succumb to treaties ending their nuclear technology program didn’t raise prices as well. So after months of speculation that oil prices won’t be on a draw back for a longer period, traders at the NYMEX, the world’s largest physical commodity futures exchange, found crude oil prices falling 1.34 percent at $120.07 per barrel as of this writing.
As we see it, consumer demand not just in the US but also from Europe as well prevailed over the crisis. Cutbacks in oil demand just tamed the commotion on the trading floor that Americans have no choice but to think twice on spending freely unlike a year ago. The lower oil prices could somehow soothe fears over a higher inflation rate for the past month but consumers must take heed to this mollified short-term oil price drop since the housing slump is still far from over.
But this may prove to be ephemeral soon. Come December, expect higher oil demand from the US and China when temperatures drop below zero. Anytime this month, tension between Iran and the UN Security Council may ignite debates if expanding their uranium projects continues further. Ever astute, President Ahmadinejad may just be waiting to limit his country’s supply to oil importers and as we know it, send prices back to last month’s level or worse, even higher.