Practically Speaking

Kyle and her husband moved to Brookfield in 1986. She became active in local politics and started blogging in 2004. Her focus is primarily on local issues but often includes state and national topics, too. Kyle looks at things from the taxpayers' perspective in a creative, yet down to earth way, addressing them from a practical point of view.

Gustav miss the reason oil falls? Stocks lose steam; Oil tumbles on relief over Gustav

The Dow Jones industrial average initially surged nearly 250 points on Tuesday as oil prices dropped as low as $105.46 a barrel on reports that the Gulf Coast and its oil facilities have been spared heavy damage from Hurricane Gustav.

But the positive effect of the storm's outcome on stocks was short-lived. Falling commodities prices caused the stocks of oil and metals companies to sink, dragging on the broader market; the technology sector was also weak.

And by midafternoon trading, crude oil lifted off its lows of the day, trading about $110 a barrel and signaling to some traders that oil has the potential to rebound as quickly as it sold off.

"We could have another storm announced tomorrow, and it'd be back up again," said Anthony Conroy, managing director and head trader for BNY ConvergEx Group.


As Hurricane Gustav dissipated, traders quickly turned their attention to slowing global economic growth, speculating that demand for crude will be dampened even in rapidly expanding China and India.

"The market continues to be weighed down by worries of a global economic downturn and slowing oil demand in developing markets," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "Action by OPEC and supply side concerns should put a backstop to any sharp price drop."

The Organization of Petroleum Exporting Countries is scheduled to meet Sept. 9 in Vienna and has indicated it may take action to keep oil at the $100 a barrel level.



This site uses Facebook comments to make it easier for you to contribute. If you see a comment you would like to flag for spam or abuse, click the "x" in the upper right of it. By posting, you agree to our Terms of Use.

Page Tools