| Oil Prices |
There was a time when it seemed that the world economy would implode not because of the financial crisis, which was just a blinker on the economic radar, but due to rising commodity prices.
Prices of crude in particular were rising very fast. They had gone up from the $60 a barrel to a high of $147 a barrel. Other commodity prices were also rising. Rising demand was only one of the reasons; speculation, and fear that it would rise further (reports saw it climbing to $200 a barrel by the end of the year), were also major contributors.
Investors were building up huge inventories to safeguard against future price rise, which was ironically, pushing up the prices.
Only then the economic crisis set in, and it became clear that the world is in for a prolonged period of recession, and falling productivity, crude prices started sliding. Now they are hovering around $45 a barrel mark, a 4-year low.
Despite OPEC’s announcement of production cuts twice, the prices are refusing to climb up. The reason of course is the inventories built during the high price period. Unless those inventories are substantially reduced, and industrial production once again picks up, there is little chance of oil prices climbing up soon.
Full Coverage: Oil Crises»
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