Saturday March 2, 2013

I've Been Thinking:

Oil prices dropped yesterday.

The price of oil per barrel dropped to $90. The most significant reason for the fall is the all powerful sequester.

Because of potential cuts across the board, the entire economy is in jeopardy of a free fall. As a result - oil process dropped. Add to that the slowdown in all markets across all spectra in China and you have price changes.

The world economy is elastic, it is very responsive to changes. And oil prices are extremely responsive to US consumption.

The US is the largest consumer of oil in the world consuming 19, 150,000 barrels per day. This is far more than the EU, which is the second largest consumer, at 13 million barrels per day. All total the EU and the US compose 33% of the world's oil. This proves just how important the US economic conditions are to the global price of oil.

We heard about the sequester for weeks and not a single person spoke about consequences other than the layoffs and the cutbacks.

Oil. Sequester. Expect a huge global impact.

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