According to NASDAQ:
DAVOS, Switzerland -(Dow Jones)- The surprise Federal Reserve rate cut of 75 basis points Tuesday is good news for consumers and energy demand, a senior OPEC delegate based in the Persian Gulf said Tuesday.“The rate cuts, I think, can only be seen as positive for consumers,” the delegate told Dow Jones Newswires by telephone. “From an energy perspective, there’s concern about the health of oil demand given all the financial problems, so this sort of action is positive for energy demand.”
The Fed cut its federal funds rate to 3.5% “in view of a weakening of the economic outlook and increasing downside risks to growth,” it said.
Earlier Tuesday, the Organization of Petroleum Exporting Countries said in its monthly oil market report that uncertainty over the need for its oil has risen on fears of a recession in the U.S. and increased fuzziness on just how much crude non-OPEC producers such as Norway and Mexico would deliver.
“As always, OPEC member countries are monitoring market developments closely and will review the situation” when it meets Feb. 1 in Vienna, the report said.
The group, which has expanded its membership to include Angola and Ecuador in recent months, left its forecasts for world oil demand throughout this year almost unchanged. Demand growth of 1.52%, or 1.3 million barrels a day, is a tad lower than it expected a month ago, and demand is forecast at a little over 87 million barrels a day.
- The oil prices shot up from on Tuesday rebounding off $87.45 per barrel to shoot up to highest $89.71 per barrel at 2.21 am (+8 GMT Singapore Time)
This new definitely add fuel to the oil prices and probably bring back the higher oil prices as I had previously predicted. This can go both ways as the economic situation might either stabilize or go violently north or south depending on what’s happening in the world scene next.
It can be more violence in the middle east, IRAN tension at Straits of Hormuz, oil pipelines sabotages at Nigeria or OPEC decisions to remain same output or cut supply at the February Meeting.
The possibility of more serious subprime credit crisis to unveil at the Subprime Insurance industry or other credit industry to be affected. Does this cut in interest rates going to sustain the economic growth for long term, middle term or relatively short term?
We are going to be facing hyper inflation when oil prices shoots up or result in a depression? Question about the future that most economist dare not guarantee with 100% certainty. What I can predict is a sudden spike in oil prices before market “pause” or “shut down” to calm the market with a hope to stabilize it.
There are people who are investing in the markets that can earn money both in the bear market and bull market, it’s those who don’t have time to monitor and not savvy enough to control their own investments will lose big time. That means majority of the investors will have a possibility of losing out if they have absolutely no control or left their funds to incompetent fund managers.
Fund managers or economist may still have the mentality of the past where the economy will continue to be business as usual in any event of a depression or hyper inflation due to higher oil prices and zero or negative growth.
Go green on renewable energies that does not comes from food crops!…
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