Major Drop for Oil and Natural Gas
There was a major drop in oil and gas prices on Wednesday. This came as a big shock to many of us, but if play appropriately could be turned into a positive. Here is some explanation as to what happened, why it happened, what what to expect from here.
Shares of major oil producers fell Wednesday as crude oil prices hit their lowest levels since late June and a report on the services industry raised new concern that the economy is faltering.
As the Energy Department reported rising supplies of crude oil and gasoline, the price of benchmark West Texas Intermediate crude oil dropped $2.10 to $91.69 a barrel in midday trading. In London, Brent crude also fell.
The September contract for West Texas Intermediate light sweet crude oil fell $5.30 to settle at $86.63 — earlier hitting a year-to-date low of $86.04. Brent crude oil for September delivery tumbled $5.44 to $107.79 a barrel, down a third straight day and earlier hitting a one-month low of $107.
The U.S. dollar index was surging by 1.6% to $75.09 as risk averse traders weighed on the Bank of England’s vote to keep interest rates at 0.5% and maintain its current monetary easing program, and the European Central Bank’s decision to hold rates at 1.5%.
Traders continue to fret over the possibility that European Union debt problems could spread to Spain and Italy and lead to sovereign debt restructuring.
Capital Economics thinks that the European Central Bank’s interest rate hikes for curtailing inflation have come to an end on very slow growth in the region going forward. Eurozone retailsales ticked up a mere 0.9% in June, following a 1.3% decline in May.
Oil and gas stocks were falling. Apache Corporation(APA_) was losing 5.6% to $111.86,Anadarko Petroleum(APC_) was tumbling 7.6% to $74.21, Devon Energy(DVN_) was falling 4% to $72.76, Eagle Rock Energy(EROC_) was behind 6.8% to $10.18,Chesapeake Energy(CHK_) was under by 6.7% to $31.93, Kinder Morgan Inc(KMI_)was down 3.4% to $26.79 and Kinder Morgan Energy Partners LP(KMP_) was lower by 2.6% to $67.62.
That is a brief summary of what went down Wednesday at market close. Commodities were hit hard, especially oil and gas. Don’t worry, stay positive! This will create a great buying opportunity to get in on the high priced stocks you have been eyeing. Get a bargain now, and see the pay out later. We will be sure to keep you updated on when stocks are expected to jump back up, and which stocks you want to consider.
Quotes taken from reports by Associated Press, and Andrea Tse.
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