Doubts about a global economic recovery have pushed oil down, along with just about everything else.
As numerous commentators have pointed out, news from Iran and of more attacks on facilities in Nigeria failed to stop a slide in oil prices in the past week.
Stephen Schork points to the wider spread between natural gas and crude oil as being in part due to the influence on oil of exogenous factors – “(geopolitics, dollar value and politically savvy euphemisms, i.e. “green shoots”). He asks whether the oil rally has run its course:
Over the last week we have received a number a queries regarding the impact of the ongoing civil unrest in Iran to crude oil prices. Our response has been… it has yet to matter. Spot August WTI is off 8% from recent highs, despite the headlines from Iran. Is this a case of good news/bad action? It certainly smells that way. That is to say, the bullish trend in crude oil has failed to perpetuate despite the introduction of bullish headlines from Iran… or Nigeria for that matter. Crude oil’s rapid rise has stalled. This is not how a “bull market” responds to evidence of an incipient revolution and the violent suppression of that revolution inside a country that sits atop 1 out of 10 barrels of the world’s proven reserve of oil.
Perhaps those fears of inflated oil prices affecting a recovery were a little premature?
Markets: Oil below $70 despite Iranian upheaval and attacks in Nigeria (FT Energy Source, 22/06/09)
Risk aversion worries rattle world markets (FT, 22/06/09)