Reuters, Friday October 24 2008
posted by: Zaki Bernoussi
The punch line of this article is four fold; oil falls nearly $4 a barrel, OPEC (Organization of the Petroleum Exporting Countries) agrees to cut output 1.5 million bpd, global stock markets tumble and U.S. highway miles traveled fell the most ever in August.
The signs of a drastic slowdown in Europe and a bunch of profit warnings and job cut announcements from companies around the world intensified fears of deep global recession.
Oil has also plunged because of the credit crisis hitting the economy in the United States. "We believe this week will mark the start of a new quota reduction cycle by OPEC and it will continue through 2009," Deutsche Bank analyst Michael Lewis said. "However, we believe production cuts will not rescue the oil price,"
The International Energy Agency, which advises industrialized consumer countries, was critical of OPEC's cut. According to them, the nerves of the markets are what make these cuts a problem.
A big thing to focus on in this article is the fact that drivers are driving far less. U.S Transportation Department said that drivers drove 15 billion miles less in August than a year earlier. This is the highest decline ever recorded for a single month in a year-to-year comparison. America took heed and reworked their idea of travel. In a positive sense it has brought the price of gas down but has brought the concern of inflexibility in the market up. The price of oil is run by fear, this fear is determining how often we travel and America is moving a lot less on wheels.
http://www.guardian.co.uk/business/feedarticle/7921573
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