Oil prices had been surging for the past year — until Tuesday morning, just after 10 a.m. Eastern time. Within an hour and a half...
Oil prices had been surging for the past year — until Tuesday morning, just after 10 a.m. Eastern time. Within an hour and a half, prices dropped more than $6 a barrel, their largest one-day decline in dollar terms since the 1991 Gulf War.
What happened? Fed Chairman Ben Bernanke, testifying on Capitol Hill, offered a dour economic outlook, crimping expectations for demand. The next morning, prices dropped again, just after 10:30 a.m. That’s when the government said crude supplies unexpectedly rose the previous week.
To be sure, the drops this past week have been big in dollar terms but are fairly normal historically in percentage terms, analysts say.
A $10-per-barrel swing now is analogous to a $1.50-per-barrel move in the 1990s, when oil was around $20, says Barclays Capital analyst Paul Horsnell.
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“A movement of $1.50 in the 1990s was very large but not completely extreme.”
Please turn it off
Investors have become all-too-familiar with investment bubbles in recent years.
Early in the decade, the bubble in Internet stocks popped, then U.S. home prices, and lately, Chinese stocks.
But declines have been so widespread across U.S. stock sectors that Citi Investment Research strategist Tobias Levkovich says we may now be seeing the opposite of a bubble: a vacuum.
“The current hammering of financial stocks beyond some more balanced scope suggests that a vacuum is being created where all the investment air is being sucked out of equities.”
Forget that spy novel. For beach reading this summer, why not curl up with an analyst report on a bond mutual fund?
Morningstar.com unveiled the site’s 10 most-read analyst reports on fixed-income funds. High oil prices have lots of investors interested in inflation-protected funds, while the weak dollar is sparking interest in foreign bond funds.
The Associated Press