Brent oil trading at $71 as commodities & markets wacked

21 May 2010 21 May 2010

BonTrade

Brent oil prices ended trading on Thursday down $1.85 to settle at $71.84 a barrel as world commodities and stock markets got wacked as investors look for the exit door.

“People are saying it’s time to get out,” said Michael Lynch, president of Strategic Energy & Economic Research. Earlier this year, Lynch stood out from many of his peers by predicting that oil prices would fall.

“The market has gotten way ahead of itself,” Lynch said. “People kept saying that soon oil demand will go up and inventories will go down. But that’s not happening.”

Futures contracts for most energy commodities including oil prices slumped as financial troubles in Europe and weak jobs numbers in the US sparked a sell off on Wall Street. The Dow Jones Industrial Average was down 376 points at close on Thursday.

“This collapse came without much warning in the oil markets,” Cameron Hanover said in a report. “There are signs that the economy may not be as strong as initially believed.”

“The euro-zone’s problems are a painful reminder that the global financial crisis has only been partly resolved by transferring it from the banking sector to the public finances,” Capital Economics said in a report. “It would be wrong to assume that commodity prices will recover to their immediate pre crisis levels as if nothing had happened in the meantime.”