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Who’s in control of Oil Prices? Is it FEAR or OPEC?
Energy prices generally dipped lower Aug. 12 ending a 2-day rebound, but US crude remained above $85/bbl in the New York market.
James Zhang at Standard New York Securities Inc., the Standard Bank Group, said oil remained “broadly flat” on Aug. 12 “on reasonable US retail sales data but sharply declining consumer confidence.”
Zhang said, “European oil products weakened across the barrel vs. crude, which pushed refining margins down by around $1/bbl. The term structure for Brent and WTI strengthened further on healthy physical demand for crude oil and increased hedging activity.”
He noted, “The recent fall in the oil price might provide some relief against economic headwinds. However, there is empirical evidence of an asymmetric response from economic growth to changes in the oil price. An increase in oil prices were often associated with economic recessions, but oil price decreases did not necessarily bring about corresponding economic booms.”
