NYMEX crude oil price falls below $90 as credit crisis deepens in Europe

Crude oil fell below $90 a barrel in New York for the first time since Feb 2008 as the credit crisis deepened in Europe, adding to concerns that global economic growth will slow and reduce demand for fuels. European leaders pledged to bail out troubled banks and protect depositors. Crude oil for Nov 2008 delivery fell to $88.89 a barrel on NYMEX, the lowest since 8 Feb 2008. Futures have fallen 39% from the record $147.27 reached on July 11. The dollar rose to a 13-month high against a basket of currencies, reducing the investment appeal of dollar-denominated commodities.

- This looks a lot like panic selling and deleveraging of almost every asset class, in every sector and every country. There is a short-term disconnect between the paper price of commodities and the physical reality out in the real world.

China's car sales are increasing over 40%, the world's second- (or third- by now) largest oil field, Mexico's Cantarell is declining over 30%, world grain levels are still at the lowest in decades, world central banks are getting ready embark on a co-ordinated effort to inflate all of their respective currencies to oblivion, and the media is starting to celebrate the demise of the "commodities bubble"?

Not so fast. Let's see a global economic collapse first, and an actual decrease in the money supply, then we will talk about demand destruction and monetary deflation. Not before then.

Singapore property market boom ends : URA expects Q3 2008 private home prices to fall 1.8%

This article belongs to the Singapore property market story arc.

channelnewsasia.com :

Private home prices in Singapore fell by 1.8% in the third quarter [Q3 2008], according to flash estimates released on Thursday [2 Oct 2008] by the Urban Redevelopment Authority [URA]. This is the first time the index of private residential properties has dipped in 4 years. The cost of high-end properties in prime districts continues to taper, with prices falling by 2% quarter-on-quarter, but those in the mass market segment grew marginally by 0.1%. Industry watchers expect a gradual sell-down of properties if prices trend down further and the economy takes a turn for the worse. In contrast, prices of resale public housing flats rose 4.2% in the third quarter.

- This little tidbit hit the front page of the Straits Times recently. It is now all but official. The boom in the Singapore real estate market has ended, and we are heading downward. It wasn't too long ago that bystanders stood gawking as the highest of the high end of the housing market started hitting $2000, $3800 and then over $5000 per square foot.

Accompanying this dizzying rise in property prices, rentals rose, with retail shops in the prime Orchard Road shopping area reportedly tripling from $10 per square foot per month to over $30. Likewise, in the commercial area, prime office space tripled as well, with rental rates rising from $5 psf per month to over $15. Even the lowliest 5-room HDB public-housing apartment flats started renting out for well over $1000 per month.

It is interesting to see how the credit crisis has changed all that. Early rumblings started months back when property agents started talking about business slowing down. In retrospect, the early warning indicators were all there : the Kuwaitis pulling out of a high-profile deal, the government raising development charges and promising more supply (governments tend to have slower reaction times), the talk of moving some companies and departments out of the central business district into cheaper suburban areas. The crucial confirmation of a trend reversal came when I read on a forum just a few weeks back about property agents approaching people to buy properties from them instead of the usual question, "are you interested in selling your house?" That was a huge flashing signal. And now we have this.

(2008-10-06 15:16:27 SGT) [Biz] Permalink

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