Oil prices plunged After Automotive Bailout U.S. Failed

The price of crude oil plunged on Friday, local time, after a bailout plan for the automotive industry so that the U.S. failed to heighten concern about slowing down on demand due to the global financial crisis bites. As reported by AFP, light sweet crude oil for January delivery fell 1.70 U.S. dollars to be closed at 46.28 U.S. dollars per barrel on the New York Mercantile Exchange. In the Intercontinental Exchange, London, Brent crude North Sea for January delivery plunged 98 cents on a steady 46.41 U.S. dollars per barrel.

Oil price rebound has been more than 10 percent on Thursday, amid signals that OPEC and Russia will cooperate next week in the reduction of production to support the increase of oil prices plunged. “At first, the price of commodities including oil to rally, but then forced by crisis of confidence in the middle of the failure of the U.S. automotive bailout plan,” said analyst John Kilduff of MF Global.

A bailout plan by 14 billion U.S. dollars to save the U.S. automotive industry is sick, failed in the U.S. Senate on Thursday, increasing the prospect bankruptcy General Motors and Chrysler, which have millions of workers. The burden of this global stock market Friday, and press the switch commodity prices.
“Crude Oil to be the decrease in the stock market on Friday,” said Nimit wine, a broker Sucden Analyst Company. “Reluctance to take risks created the automotive industry bailout after the failure.”

The State Oil Organization (OPEC) is estimated to announce the cutting of production at a meeting next Wednesday in an effort to encourage the increase of prices that have fallen from new record high above 147 U.S. dollars in July. OPEC, which produces 40 percent crude oil world, has been called producer countries of non-OPEC oil to participate in reducing production to keep oil prices decline sharply. Russia on Thursday is ready to join with OPEC to keep crude oil prices fall and will become part of the oil cartel if Moscow became interested members. Russian non-OPEC members, but ranked equal with Saudi Arabia, de facto cartel leaders, as the world’s largest oil exporter.

“Failure bailout will increase automotive specter of recession in depth because it will also impact on the network automotive supplier industry,” said Kilduff. Meanwhile, the International Energy Agency (IEA) on Thursday, project global oil demand will fall this year and is the first time in half a century because slowing down of economy growth in the world. “Demand for oil is now estimated to global contraction in 2008 for the first time since 1983, has 0.2 million DSL, with the total (daily demand) this year revised down 350,000 to be 85.8 million DSL BPH,” said the IEA report in the latest oil market.

A week ago, the price of oil has fallen below 40 U.S. dollars, the lowest level in four years, as more bad than expected labor data in the United States that improve the prospects decrease demand more energy furious. Oil prices in the early 2008 level of 100 penetrate the U.S. dollar for the first time, and as demand picked up in a large amount of energy from China and India, plus the political chaos main crude oil exporter, namely Iran and Nigeria.

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One Response to “Oil prices plunged After Automotive Bailout U.S. Failed”

  1. Even as recently as Thursday ago it was relatively rare to find OPEC who offered trailing production. If you trade production and focus on OPEC, you can trade just a few times a year and pile up dollars.

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