Oil rates decreases by $5 this week
Crude oil sinks as new home sales considered as stronger consumer sentiment and falling demand in U.S.
Economic reports calmed nervous investors as the oil prices sank this Friday, by more than $5 this week. Drop in demand also pressured prices to fall reports says.
A survey from the University of Michigan revealed that, consumer sentiments had a boost by government’s economic stimulus package, and the prices fell as new home sales were stronger than expected last month according to government report.
Above reports indicates that the increase in orders for durable goods drive the investors away from oil which has been used as a hedge against economic downturn.
A senior market analyst with Alaron Trading in Chicago said “The investors bought oil because they were worried about the economy”.
The reports from The Dow industrials gave the investors a confidence after a sharp sell off on previous day, the gains were nearly 100 points on Friday morning trading and were still up about 40 points till midday, as investors invest their money in the stocks.
Due to high fuel prices in recent days demand has indeed declined, which in turns causes fall in oil prices as confirmed by reports.
As compared to last year the gasoline demand in the United States had fallen 2.4% from the same period as per a report released on Wednesday from an Energy Department. For the 13th week in a row a weekly survey of filling station credit card swipes from MasterCard recorded a declining demand.
Fall in demand in July is of a main concern as usually Americans use maximum fuel in summers. This helps to push prices down $24 a barrel from a record trading high of $147.27. And some investors fear that the U.S. demand decline may spread to other countries as well.
The tensions between the Western countries, Iran and militant attacks in Nigeria the largest oil producer, has been main concerns that drove oil prices to their record highs.
