Brent oil trading at $77 as global economic worries bite

Brent oil prices open Thursday’s trading session lower, around the $77 mark as global economic worries see investors pulling out of stock markets seen as flight from risky assets.

In London, Brent crude oil futures for September 2010 delivery was trading at $77.15, 08.00 GMT on the ICE Futures Exchange.

Global stock markets lost value yesterday as investors had renewed concerns over the health of the US, Chinese and UK economies amid renewed fears of a double dip recession.

Many traders were sent running for safety buying gilts, long dated bonds and buying back into the US dollar.

US economy grew at an annualised rate of 1.3pc in the three months to June, far below the government’s 2.4pc estimate and the US Federal Reserve have stepped in with it’s “QE lite” solution, which is just another term for printing US dollars.

Commodities including Brent oil are priced in dollars, hence it’s going to be interesting to see what happens when alarm bells start ringing for an exit on holding US dollars. In fact, alarm bells should already be ringing for what could be the start of a big leg down in value for the US dollar.

However, for the moment, the US dollar has continued to rebound from its recent lows, posting its largest one day gain in almost two years as fears about the outlook for global growth start to weigh on sentiment.

Crude oil and commodity prices will eventually move higher when the US dollar finally comes back to some normality.