Should be interesting to see where Oil goes for the rest of the year.
If it keeps going down it could really help out our economy and really
hurt Peter Schiff's reputation. Lol. Just a little joke S&L.
Why Commodities Prices Are Plunging Once Again
Published: Wednesday, 11 May 2011 | 3:04 PM ET Text Size
By: Sharon Epperson
CNBC Senior Energy Correspondent
The euro is getting murdered and commodities are plunging—again.
Greece's debt crisis and rising inflation concerns in Poland and England have increased concerns about euro zone economies, causing a sharp sell-off in the euro and spike in the dollar.
It's like deja vu—a repeat of last week's rout. Commodities are correcting again. Oil settled just above $98, silver is down $3, copper is at its lowest level since last December.
Commodity traders have turned their attention from floods in the U.S. to inflation fears in Europe and China.
Despite an easing of China's consumer inflation, there are still worries that the country will raise interest rates to slow down growth and emerging market demand for energy and other commodities will suffer.
Today, the potential impact of Midwest floods on energy production is not as great a concern as the fact that U.S. gasoline demand is declining. High gasoline prices are gouging U.S. consumers’ discretionary incomes.
The latest data from the U.S. Energy Department shows the 4-week average for gasoline demand is down 2.4% from where it was a year ago. Gasoline supplies unexpectedly rose last week, where most analysts were looking for a sharp decline due to refinery outages and pipelines issues.
The surprisingly bearish report on petroleum inventories has exacerbated the sell-off in energy commodities. Gasoline futures, which rallied sharply over the past two sessions, have taken the greatest hit.
Trading in crude oil, gasoline and heating oil futures was halted a little at 12:06pm ET after June RBOB gasoline futures fell 25 cents, reaching the daily price limit and triggering circuit breakers at the New York Mercantile Exchange to stop trading in those energy commodities.
Trading resumed at 12:11pm ET with daily price limits now raised to $20 for crude oil and $.50 for gasoline and heating oil until 5:15 p.m. today, the end of the Globex electronic trading session.