Wednesday, Sep 19, 2007
Oil above $82 a barrel after US rate cut
SKY News: Rate cut sends oil to fresh highs
Oil prices have reached fresh highs above $82 a barrel after the US Federal Reserve cut interest rates. The cut in the cost of borrowing helped to allay fears about the US economy being stifled ahead of peak winter demand for fuel.
Posted by webmaster @ 02:27 PM (706 views) Add Comment
9 Comments
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1. alan said...
The Arabs and OPEC have decided, as predicted, that the US dollar has devalued itself. Accordingly the prices have gone up (in $ terms) but not for currencies like the Euro, which have appreciated against the $ in the last few weeks. A barrel of oil is about the same price in Euro money.
As result of the sub-prime selling problems, loans are still being defaulted on. However, Wall St sold these bonds across the world. Alternative havens for investment are therefore being sought by the Arabs and Chinese - there is a "backing away" from the dollar. Posts earlier today from Bloomberg and Reuters telling the world the sub prime problem is turning into a cancer that is turning into a catastrophe is only sending the price of commodities higher.
The credit market is siezing up as result of these debt defaults, and the central banks are seeking to get things moving again. Mervyn has been told for weeks that this would happen. Lets hope he has a "cunning plan", or the backbone of the UK economy is toast..
Against this backdrop, the results of RICS, Nationwide, HBOS and other cyclical reporting indices have a lesser importance this month, I feel. Our whole economy could go pear shaped, and while we would like to see houses cheaper, I don't want to drop back into economic and social meltdown.
2. tyrellcorporation said...
This sustained pick-up in oil prices will snuff out the recent fabricated CPI drops. The re-weighting of utility bills when they were at the top of the price cycle worked wonders over the last few inflation reports but that'll only work temporarily. The ONS will have to work overtime to fiddle the stats as these oil and wheat prices feed in to inflation.
3. planning4acrash said...
Reduced US interest rates will increase demand for oil and increase oil prices further. We really do need a recession because the economy cannot steam along like this forever.
4. voiceofreason said...
There is a feeling amongst colleagues of mine that there isn't much point working harder for pay rises because the gap between pay and affording the next rung on the housing ladder is so vast.
Anyone else seen this phenomenon ?
If so, do you think the UK economy could actually be slowed by the workers losing the incentives to work ?
5. cyril said...
@voiceofreason I think you're right. I'm stuck in a tiny house and there's no room for all my stuff !
I lost the incentive to work ages ago by it was my wife who gave up not me.
6. inbreda said...
VoR...
yes. I gave up work altogether to go travelling for this very reason.
7. Drewster said...
VoR.... There is an increasingly popular attitude amonst the chav classes in London of "what's the point in saving money, I'll never be able to afford to buy a house so I might as well just spend it all on booze, drugs and bling". This attitude is rising to the lower-end of the professional classes: e.g. discussing student debt with a student friend, he said "I'll never have to pay it back as long as I keep my earnings below £15k, so I'll just do that." (Note that student loans expire after 25 years anyway, so at the age of 46-47 he could be debt-free again).
8. deepak said...
It will make no difference as the US$ you pay it in has also slumped.
So the GBP you need to buy one barrel of oil remains same.
9. mrmickey said...
voiceofreason i'm exactly in that position what's the point of busting a gut to pay for an extra bedroom. plus the harder you work the more tax the government get, i work contracts so if i'm out of work i live on my savings, not having work isn't much fun but at least i'm not paying any tax, but that doesn't stop the tax office pestering me to find out why i'm not working and paying my pound of flesh .