Oil Prices Plummet In Uncertain Market

Oil prices are falling, as traders dial back their expectation for the global demand for oil. But drivers are still waiting for the price of gasoline to drop as well.

The price of oil closed on Tuesday at about $79 a barrel — the lowest since last September.

Crude oil prices were on the rise at the beginning of the year. Unrest in the Middle East put pressure on supplies, and traders had a more optimistic outlook about the demand for oil, explains Richard Soultanian, an oil industry analyst with NUS Consulting Group.

"If the economy's going to grow and there's lots of money around, that means people are going to use more of everything — more copper, more silver, more oil, more gasoline. So [traders] started to bid the price of all that up," Soultanian says.

Those initial forecasts for growing economic activity eventually fell apart. The price of crude started to dip in late spring, but it plummeted in recent days. According to Soultanian, slower-than-expected growth in the U.S. economy and an unstable stock market after the degrading of the federal government's credit rating have been a stark reality check for oil traders.

"The economy is much weaker than people expected," Soultanian says. "The global markets are very concerned about the possibility of another financial crisis."

Source: http://www.npr.org/2011/08/10/139249635/oil-prices-plummet-in-uncertain-market?ft=1&f=1003

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