NewsOil slumps on European airline fears and Goldman fraud casePreviousForecastAnalysisCrude dropped this morning below $82 per barrel due to effects from investors' expectations regarding the volcanic ash that is immensely affecting the European continent, grounding flights and freezing air traffic affecting airline companies and threatening with bankruptcy in addition to cut demand on fuel. That was coupled with the pessimism and huge sell-off following as the SEC sued Goldman Sachs for fraud.
The volcanic ash has managed to engulf the European continent, which therefore pushed several airlines to reduce flights in the past four days, which will cause airlines to lose billions of dollars.
Meanwhile, uncertainty is currently dominating markets regarding whether the volcanic ash will further affect economic conditions; thus, negatively reflecting on demand levels on jet fuel in this critical stage, where the global economy is attempting to exit the recession.
Crude managed to fall in the late session last Friday by $2.27 to close around $83.24 per barrel, after the SEC sued Goldman Sachs for fraud over their role in the crisis and selling CDOs linked to the subprime market without disclosing information.
The new alarming news regarding Goldman Sachs fueled expectations that the bank might be forced to close its positions in the market and strong holdings of oil contracts to cover its obligations shall the bank be found guilty of charges.
Crude opened last Friday around $85.31 after recording its highest around $85.33 and lowest around $82.55 per barrel, closing below $82.90 per barrel.
The S&P GSCI index Friday settled at 544.18 gaining 9.13; whereas the RJ/CRB commodity index dropped by 3.46 to close around 276.29.
In NYMEX as of 02:30 EST; motor fuel dropped to $224.700 per gallon by $3.800; heating futures are trading around $218.000 per gallon after falling by $3.690; whereas natural gas climbed by $0.002 to record $4.041 per 1000 cubic feet. In London, Brent plunged by $1.130 to record $84.860.
Crude opened today around $82.300 recording its highest around $81.30 and lowest around $82.30 per barrel, where it is currently trading around $81.600 per barrel.