Wednesday, August 06, 2008
Crude Continues to Drop
Further to my previous post about the Baltic Dry Index, where I stated "If the Baltic Dry Index continues to fall, it indicates demand for raw materials is dropping, which means orders are slowing down. The oil price will be bound to follow", well the Baltic Dry Index has continued to drop. It's now fallen to 7869. And crude has dropped alongside it - see the graph (click to enlarge).
My feeling is that the peaks in both the Baltic Dry Index and oil were down to the race to get things ready for the Beijing Olympics. Elsewhere there was a definite slowdown in activity. The oil price drop is not only a benefit for the road user, it should have implications for gas prices if it is sustained, as gas bought from Europe is linked to oil prices. The question then becomes how soon the gas suppliers react to changes in the market prices (which is down to the regulators to keep an eye on).