Crude Oil To Fall Below 40 Again
The joy brought by the US government's bailout and employment plans was unsustainable and oil price tumbled to below $40/bbl again. Investors remained concerned that the deterioration in global economic growth will reduce oil demand to an unexpectedly low level.
In November, imports in Japan and S. Korea plunged 17% and 12% respectively. In the US inventory for crude oil recorded gains almost every consecutive week. The Energy Department will report stockpile tomorrow which is expected to show addition in oil inventory by 0.9 mmb.
US stocks also dropped as corporations revised down earnings estimates for 2009. The S&P 500 Index slid 1.8% while the DJIA dropped 0.7%, led by financial and raw material stocks. MatLife, an insurance company, fell 12% as it invested in $36B worth of commercial mortgages which may be at risk of default. Although General Motor will be getting emergency loan from the government, the shares couldn't help plunging 22%. Shares in Asia followed US' suit today. While Japan's market is closed for a public holiday, S. Korea's Kospi fell 2%.
Gold price changes little at 845 level as the dollar is taking a breath after plummeting by almost 10% last week. Demand for gold and other precious metals as alternative investment increased. SPDR Gold Trust reported holding of 775.3 metric tons of gold last week, a record high level.