Wednesday, 23 July 2008
Has The Oil Price Turned
Probably the most interesting question in the financial markets right now is whether the oil price has turned. The fall in the past couple of weeks has certainly been dramatic: oil has shuttled back down to $126 a barrel from its peak in June of $145. Lehman Brothers are predicting that it will be back down to $90 by the start of next year, which may well be the new long term price. What happens to oil matters because it may well signal a turning point for the global economy. If oil falls, inflation will drop back, and central banks will start cutting rates again, helping out crumbling property markets and flagging consumers. So, if you only want to watch one price, watch that one.