Oil Prices
A down week for oil with the front month November WTI contract closing Friday at US$93.88 a barrel, off US$13.01 cents a barrel from the previous week’s close.
The rising dollar and fears of a worldwide recession impacting energy demand scuttled the previous week’s gains. We see the oil price remaining very volatile as we do all commodity prices and the jittery broader stock markets.
On Friday the US House of Representatives passed the financial rescue package and President Bush signed it into law. Now the implementation begins.
The deal wasn’t enough to save US markets from another negative day with the Dow Jones finishing down 157 points Friday after our market closed.
We suspect the media coverage of the package over the weekend will be moderately positive even if doubts remain about whether the action taken by the US will prove sufficient to prevent a major world economic collapse.
Our market should open mixed to lower Monday. It’s a Labour Day holiday in NSW, ACT and SA but the ASX will be open according to its trading calendar.
If we are right about the media coverage of the US rescue plan, the US market should open the week with some reasonable gains providing a more positive lead for our market on Tuesday.
Tapis Oil Price
Tapis, an Asian marker crude benchmark for Australasian producers, was stronger closing Friday at US$95.82 a barrel, down US$8.34 a barrel over the week.
For most Australian producers the Tapis price represented an oil price of A$122.85 a barrel at Friday’s exchange rate of A$0.78 to the US dollar. The recent fall in the Aussie continues to protect our local producers from the full impact of the drop in WTI and Tapis.