Falling oil price continues in step with feared economic gloom

 

The price of crude oil tumbled further when the markets opened for business on Monday, reflecting the widespread anxieties over the health of the global economy, exacerbated by the rising energy costs.

As of 11:45 GMT, the prices of WTI, Brent and LNG, liquified natural gas, were at $79.76, $87.34 and $6.26 respectively; the fall of crude oil price that we witnessed on Thursday, last week, continued unabated on Monday morning with one notable trend - the rate of fall; it was fairly steep, indeed.

With the UK already in recession - and bracing itself for the scenario of shrinking further - the contagion could move faster across the continent and even further in the coming months, according to the seasoned analysts.

As far as Europe is concerned, the gas reserves are almost full and the fact that the temperatures remaining relatively high in the fall appears to have helped the governments in the EU weather the storm - for now. If the temperatures, however, come down in the next three months, the stakes will rise again in inverse proportion to the falling temperatures.

The falling  oil prices clearly reflect the potential 'consumer-apathy' when it comes to filling up tanks at pumps, despite the substantial crude draw in the US, the world's largest consumer, last week. 

The fact that the fall in prices are not reflected fast enough at pumps  worries customers too: for instance, in the UK, the price of unleaded petrol at pumps still remains above £1.62, despite the fall of the commodity in the markets by over 20%.

The global economic outlook worsened during the past few weeks with the hemorrhage of jobs in the technological sector; the tech giants from Google to Facebook announced unprecedented job losses, citing falling revenues; Twitter, meanwhile, is axing jobs at an even faster rate, highlining it as the only way for the survival of the microblogging platform that bleeds $ 3-4 million dollars a day, according to Chief Twit .

Analysts in the energy sector, meanwhile, are particularly worried about China, the word's top importer of the crude oil - and world's second largest consumer, after the US as well. 

Chinese consumers are losing their spending power, according the latest statistics from China; the frequent Covid-19 flare-ups and China's determination to keep them at bay, come what may, do not help boosting the consumer confidence in difficult circumstances. 

The war in Ukraine, meanwhile, is complicating the existing frosty relationship between Russia and the West, despite the former being a key player in the energy realm. 

In this context, a breakthrough in the peace efforts is one way of diffusing the global energy crises, which have already started gnawing at many vital industries in the West - and beyond. 

On political front, meanwhile, the emergence of President Trump as a Republican candidate for the presidential election in 2024 is going to have a serious impact on the energy markets, especially crude oil.

Even for his harshest critics, it is not easy to underestimate someone who effortlessly gets over 20 million followers - and counting - on Twitter within 24 hours, after being reinstated. 

Not only is he an advocate of fracking - both in federal lands and beyond - but also an avid supporter of low energy prices; he even could go what critics term, 'un-presidential', when the prices of the vital commodities are stubbornly high that in turn take their toll on the economic growth of the US. 

He has done it frequently in the past; there is no reason to believe he will change his modus operandi in future. He never hesitates to pick on who is responsible for manipulation of energy prices, if any,  and vent his fury, followed by a proportionate economic blow.

In this context, energy analysts will undoubtedly decipher President Trump's political speeches in the coming months, word-for-word,  in order to gauge the US energy policies under a different administration; it may rattle the producers, but President Trump's audience is mainly the consumers.  

Having been bruised by the recent Midterm election, the Biden Administration will find it difficult to take on the former president on this front.