Speculation over a rate cut by the US Federal Reserve today (30 October) has driven oil prices close to US $95 and gold prices to their highest since 1980. The euro has reached a new all-time high of US $1.44.
Reacting to the US banking and real estate crises, the Fed is expected to cut interest rates by another 0.25% on 30 October, following a similar step on 18 September. As a result of the first rate cut in four years, investors are taking flight from US government bonds into commodity stocks and other currencies, namely the euro, analysts say.
As a result, the euro reached a new all-time high of US $ 1.4438 on 29 October. European and Asian stock markets saw a strong boom, with institutional investors in particular showing a strong preference for energy stocks. Consequently, the petrol price rose to US $93.80.
A number of other reasons further contributed to the raise in oil prices:
- The US failure in Iraq and speculations on US military involvement with Iran is contributing to further destabilisation of the Middle East region;
- the energy consumption of evolving economies such as India and China is increasing at a fast pace and is expected to continue to do so, and;
- a number of recent authoritative reports have dampened expectations regarding the world’s remaining energy reserves.
On 7 November, the International Energy Agency will present the 2007 edition of the World Energy Outlook, focusing on rising consumption in China and India.
- Economic and Monetary Policy Commissioner Joaquín Almunia (speech):Weathering the storm – the impact of the Financial Market Turmoil and Global Economics(18 October 2007)
- Energy Commissioner Andris Piebalgs (speech):Oil and gas geopolitics(2 October 2007)
Think tanks & Academia
- BBC:Dollar plumbs new low versus euro(29 October 2007)
- MarketWatch:Oil tops $93 a barrel as Mexico shuts production(29 October 2007)
- Bloomberg:Dollar Falls to Record Low Against Euro on Bets Fed to Cut Rate(29 October 2007)
- Financial Times:Dollar and oil hit new records(29 October 2007)
- Le Monde:Le pétrole franchit les 93 dollars et l'euro dépasse 1,44 dollar(29 October 2007)
- L'Express:L'euro et le pétrole : condamnés à la hausse ?(30 October 2007)
- Deutsche Welle:Öl, Euro, Gold und Aktien eilen von einem Rekord zum nächsten(29 October 2007)
- Neue Zürcher Zeitung:Der Ölpreis erreicht Rekordhoch(29 October 2007)
- ZDF:Ölpreis erreicht in Asien Rekordwert(29 October 2007)
- The Oil drum:Oil (CLZ07) settles above $93...and in the next month...?(29 October 2007)
- 3Eintelligence:EU conference on post-carbon society paints gloomy picture(25 October 2007)