Economic concerns push oil prices to a five-week low

Posted Jul 7th 2009 8:00AM by Michael Fowlkes
Filed under: Major Movement, Middle East, Economic Data, Oil, Recession, Financial Crisis

Over the past couple of months we have seen oil prices move steadily higher, but the precious crude sold off Monday as economic concerns returned to the market.

What a difference a week makes. This time last week we were seeing increased optimism that the current recession was nearing its end, but those hopes were wiped out late last week by disappointing consumer confidence and employment data.

As a result, oil fell to a five week low yesterday, dropping 4% to kick off the week. Traders pushed oil down $2.68 on the day, to $64.05. This is the lowest that we have seen since back on May 27.

The main underlying factor for Monday's action was dismal employment data last week that has created concern over just how quickly America is going to be able to come out of its recession.

The markets were closed last Friday for the 4th of July holiday, but on Thursday were rattled by a report from the Labor Department showing that unemployment had hit a 26-year high of 9.5%, and not showing any signs of slowing down. The consensus opinion is that we will definitely be seeing double digit unemployment by the end of the year. Just how quickly we hit those numbers remains to be seen.

For most of this year there has been widespread speculation that the global economy would rebound during the second half of the year. Well, we are now in the second half of the year and there is still no signs that the recession is coming to an end.

What are your current thoughts on the economy? Are you expecting to see the recession come to an end by the end of this year, or are we going to have to wait until 2010 for a turnaround? Let us hear your predictions.

Tags: economy, employment, energy, inthenews, Labor Department, LaborDepartment, oil, oil prices, OilPrices, unemployment

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Reader Comments (Page 1 of 1)

7-07-2009 @ 9:10AM

ShaunneyCakes said...

I, like most economists, believe that the recession will end by the end of 2009. The unemployment data does not change anything other then what we already know that unemployment will stay poor until beyond the end of the recession.

7-07-2009 @ 9:30AM

MANUEL GONZALEZ said...

I, like most people, have a common sense degree in economics, believe that you simply cannot spend your way out of debt! We are not even halfway into the recession and will probably go into depression if the govt doesn't stop spending.

7-07-2009 @ 9:52AM

ShaunneyCakes said...

@MANUEL GONZALEZ

I got a good chuckle out of your comment and its lack of any actual economic common sense. The government spending by Bush and Obama are one of the few reasons we are not in a Depression already (that and people panicked) if Bush would not have bailed out AIG, things would be A LOT worse.

The stimulus package by Obama is working too slow, I agree, but when it ramps up, it will help, it can't NOT. Bush and Obama have nearly poored a trillion dollars into an economy that is worth over 10 trillion, think about what would have happened if they didn't. We would likely be flirting with 15-25% unemployment right now.

The national deficit, though bad, can be fixed later, right now the focus is fixing the economy. How to you get sales up... YOU SPEND MONEY! You are not going to SAVE your way out of a recession.

And for the record... 75% of the countries on earth are running a deficit... so how big of a deal is running a deficit really? And though it can be connected to inflation, the Federal Deficit has NOTHING in any way to do with the private sector. Keep your political opinions to your self, this is an economic blog.

7-07-2009 @ 10:46AM

Rocketboy said...

"but when it ramps up, it will help, it can't NOT"

You're joking, right?

The economy is not going to be saved by pushing temporary jobs in the form of public works paid for by money that we don't have.

And have you even bothered to look where the stimulus money is going to? Look at New Mexico. A lot of that money is going into things like Medicare, and other social programs.

The Stimulus Package is nothing but a land grab for the feds. Why else would they add in language that forbids the states from reducing spending back to pre-stimulus levels when the money runs out?

7-07-2009 @ 12:30PM

MANUEL GONZALEZ said...

Did I just get taken to the economic woodshed? My opinion is my opinion. You have your's and I have mine.
Only an elitist would tell someone to keep their opinions to themselves.