Oil prices have slumped despite signals from OPEC that it may slash production again, with the markets instead focused on the most recent reports showing drastic cutbacks in spending and consumption by businesses and consumers.
The decline in sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers retrenched.
That likely means fewer vehicle miles driven, both because of job losses and less trips to the shopping mall and less money spent on vacations. Businesses are slowing down as consumption drags.
Nevertheless, as the economy turns around, consumption of fuel will increase and send oil prices higher.
George Littell of Groppe, Long & Littell “Oil prices likely will start to rally in a few weeks once OPEC cuts start to hit and cold weather sets in across the country”.
Venezuela's President Hugo Chavez has said OPEC should work to keep global oil prices in a "band between $80 and $100." Venezuela is a founding member of OPEC, which cut production by 1.5 million barrels per day last month in an attempt to boost prices.
Source: Associated Press |
