Why have oil prices been dropping?
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Bill Radke: The price of oil has fallen in European trading this morning for the fifth day in a row. The cost of U.S. light crude slipped below $64 a barrel. As Stephen Beard reports from London, some analysts say the recent bubble in oil prices
may have burst.
Stephen Beard: Oil has now dropped more than $8 a barrel in less than a week. Today’s price is the lowest for more than a month.
Doubts about demand for fuel seems to be the main factor. Investors are now fretting about the pace and scale of an economic recovery.
And they’d better, says Simon Wardell of HIS Global Insight. He and his team have been calling for an oil price pull-back for weeks.
Simon Wardell: We think the conditions in the economy probably didn’t warrant the level of price rise we saw and we’re expecting some form of correction pushing prices down to the 50’s. We’re not there yet, but some of the momentum’s gone out of the oil market for the time being.
Wardell says he expects oil to reach that $50 mark within the next two to three months.
In London, this is Stephen Beard for Marketplace.
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