NYMEX crude oil falls for the third day to below $72 on recession concern

Crude oil fell for a third day as plunging global stocks heightened concern bank bailouts won't prevent a recession. NYMEX crude oil for Nov 2008 delivery fell below $72 to $71.21, the lowest since 29 Aug 2007. Prices have dropped 51% from the record $147.27 reached on July 11. OPEC cut its 2009 demand forecast by 450,000 barrels a day to 87.21 million barrels a day because of "dramatically worsening" financial market conditions. Net-long positions by hedge funds and other large speculators fell by 36,403 contracts, or 91%, from a week earlier.

- At half the price of the record $147.27 hit earlier, we should be expecting SPR's all over the world to be filled to the brim, and inventory levels everywhere to be at the highest levels ever. There should be so little demand that half the refineries should be shut down, half of all the cars and trucks should be completely off the roads, and half of all the factories should be idle.

Actually, we should only have half the people around, with half the tractors idle in the fields, and half the truck fleet in service. If not, then things have gotten as completely crazy to the downside as it had been completely crazy to the upside. So let's split it down the middle, and we could suppose that the real price probably lies somewhere in between $70 and $140. We'll see.

London banks to cut 62000 jobs in mass layoffs as credit crisis worsens

bloomberg.com :

Banks may cut 62,000 jobs in London by the end of next year as the credit crisis worsens, the Centre for Economics and Business Research said. Firms will eliminate 28,000 jobs in London this year and 34,000 next year, the CEBR said. The cuts would reduce employment in the industry to 290,847, the lowest since 1998. Almost 46% of derivatives-related jobs in London may also go as demand for more complex products wanes. Banks and investment firms have eliminated more than 134,000 jobs globally since the beginning of the credit crisis last year.

- Not to forget that it's not just the bankers and traders themselves that will be going away, but also the IT, support, and administrative jobs, and many, many more people will be affected in the periphery, from entertainment to food to retail to transport. Add to that their collective families and you can easily imagine how at least hundreds of thousands of people will be affected eventually, in one way or another.

(2008-10-16 21:03:26 SGT) [Biz] Permalink

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