Economic worries hit oil priceNews // July 9, 2009
Concerns that the global economic recovery may not be recovering as quickly as first thought, have stopped the oil price in its tracks, says Mark McCue is a divisional director of Brewin Dolphin Ltd in Aberdeen.
"Having slumped to under US$50 a barrel earlier in the year it had risen above US$70 as optimism of a swift economic recovery embraced investors. But that optimism appears to be short-lived and the price has fallen back to early June levels," he said.
"It is a far cry from the dizzy heights the price of oil reached this time last summer, when it peaked at US$147 a barrel as emerging nations such as China looked to push ahead with their expansion plans. But the severity of the global economic crisis put many of the plans on the back burner, triggering a slump in demand."
"In a week when several oil stocks announce trading updates, including Premier Oil and Tullow Oil, most of the eyes will be on Chevron. Its interim statement on Friday will give investors an indication of how the past year’s price volatility has impacted its balance sheets in the short-term."
"In the long-term, the oil bulls remain unperturbed," he concluded. "They believe that the oil price will be well supported by the big trends, such as rising energy use across emerging markets and natural declines in existing oil production."