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Oil keeps slipping amid supply fears
Robert Lea8 Aug 2008
The sliding oil price crashed through a new threshold today, taking its fall in the past month to 20% despite growing fears of supply shortages.
In London, Brent crude traded down $2.04 at $115.82, its latest sizeable oneday reverse.
Four weeks ago US light crude hit an all-time high of $147.27. Today it was off $2.06 to $117.96.
In equity market terms that puts the oil price into a bear market, normally defined as a slide in an index of a fifth or more from a recent peak.
Today's falls in crude price indicate just how weak sentiment on oil has become - or, as some say, how strong the sellers have become in forcing down the oil price to their own speculative ends.
The latest falls come despite news from volatile oil-producing areas that normally sends the oil price spiking.
Notwithstanding a backdrop of political instability in two of the world's major producing countries, Iran and Nigeria, civil war has broken out in Georgia and dissidents have blown up pipelines in Turkey.
Fears are growing that fighting in the Black Sea state and former Russian satellite of Georgia will disrupt key pipelines from the east delivering oil and gas to western European markets.
The explosion meanwhile on the Baku-Tblisi-Ceyhan pipeline delivering from the oilfields of the Caspian Sea to the Mediterranean has also halted supplies of around one million barrels. Of that 400,000 comes from BP oilfields.
Chartists who follow the trends of the oil price say that for every day the oil price bounces it has been falling by significantly more again the next day. The graphics of the chartists indicate that as so-called support levels continue to be breached the price of oil appears to be on a downward line to $100 a barrel some time next month.
According to one academic today, those falls will be short-lived. Prof Paul Stevens, writing for the international relations consultancy Chatham House, said he expects the price of crude to hit $200 a barrel by 2013. He says "resource nationalism" will see a "supply crunch" among emerging market producers.
