Oil Price At Record Level for 2009

By: Mike Campbell
Oil is pretty much the life-blood of the global economy. To a first approximation, the price rises as economic activity and demand climb; so higher prices for crude are seen in some quarters as the herald that better economic times are ahead. The value for US light crude peaked at $81.43 before slipping back to close at $80.50. The upside sentiment has been driven by good figures for Chinese economic growth and decent corporate data coming out of the USA both of which have fuelled optimism that the global recession is really ending. On the other hand, the recent rally in the value of the US Dollar has exerted a negative pressure on the price of the commodity (which is priced in Dollars). There is also some doubt that the appreciation of the oil price has more to do with sentiment than fundamentals. Once the parameters of existing oil stocks, spare capacity and weak demand amongst industrialised nations are taken into account, the value may again fall.

Data released by European oil giant, BP, shows that Q3 profit have halved to $4.98bn since the same period in 2008. This was to be expected as a consequence of the global recession and when you remember that the price of crude was at its highest ever value in July 2008 ($147). BP’s Q3 performance was still better than many analysts were forecasting and this has been attributed to cost cutting.

In Europe’s largest economy, Germany, consumer confidence has fallen for the first time since September 2008. The decline has been blamed on higher petrol costs and fears about higher levels of unemployment to come as the global recession shudders to an end (eventually!).

Data has revealed that Spanish unemployment is the highest within the European Union with 17.9% of the workforce (4.1 million people) without work.