Consumer relief as crude oil price fall below $100 a barrel

Chris Hart, Senior Economist at the Investment Solutions said the benefit of the falling oil price will be a reduction in the price of fuel and that should translate to lower inflation figures in October.

He told BuaNews. on Wednesday that the drop in oil prices will certainly give relief from the consumer point of view with another expected drop in petrol prices next month.

Tony Twine, Director and Senior Economist at Econometrix forecast that oil prices would decline well below its current levels to about $60 a barrel.

He believed that speculative trading had accelerated the price of Brent Crude from about $50 a barrel last January to its record $147 a barrel.

Hart, however, said there was concern over the platinum and gold industries due to lower growth in platinum prices.

“As a result of lower inflation in gold and platinum, the country might experience job losses in this market,” warned Hart.

According to the Organisation of Petroleum Exporting Countries (OPEC), London Brent fell $4.54 to $99.04 a barrel, the first time world oil prices have traded in double digits since 2 April 2008.

Oil has fallen nearly 30% from record highs of more than $147 a barrel in July, pressured partly by a rebound in the dollar and a drop in demand from top energy consumers the United States.

Two weeks ago 96% of oil production and 82% of natural gas output in the United States Gulf region were reportedly closed as a result of Hurricane Gustav hitting the area.

According to the US Minerals Management Service then, at least nine refineries, whose combined production accounted for about 15% of the country's total refining capacity, have been shut down before Hurricane Gustav's arrival.

They belong to such companies as Exxon Mobil Corp, Royal Dutch Shell PLC and Valero Energy Corp.

At the time, all offshore oil production in the region were halted.

The Louisiana Offshore Oil Port, the US port which handles about 12% of the nation's total crude imports and is tied by pipeline to about half of the total US refining capacity, had shut down operation too as it is in the storm's direct path.

Article published courtesy of BuaNews