07 June, 2008

Oil prices soar above $134 a barrel !!

Oil jumped nearly 9 percent to a record $139 a barrel !!

Crude oil futures have shot up nearly US$7 a barrel, extending big gains from the previous day and racing toward an all-time high after a Morgan Stanley analyst predicted prices could hit US$150 by July 4.

The U.S. unemployment rate jumped to 5.5 per cent in May - the biggest monthly rise since 1986.

Wall Street suffered its worst losses in more than two months on Friday after crude oil prices spiked over $138, an increase of nearly $11, and the unemployment rate rose more than expected.

All 30 of the stocks that make up the Dow Jones industrial average took a hit as the index dropped nearly 400 points on fears that high energy prices will extend and deepen an economic slowdown.

The Dow fell 3.13 percent, or 394.64 points, to close at 12,209.81. The broader Standard & Poor’s 500-stock index lost 43.37 points, or 3.09 percent, to 1,360.68, its lowest point in four months. The technology-laden Nasdaq composite index declined 75.38 points, or 2.96 percent, to 2,474.56.

Shares opened lower after the government reported that the unemployment rate in May increased the most in one month in 22 years. The market decline accelerated as crude oil rose steadily, closing $10.75 higher in its biggest one-day climb ever.

Oil prices surged almost 8 percent, to $138.54 a barrel after a senior Israeli politician raised the specter of an attack on Iran and the dollar fell against the euro.

“As soon as that news hit the tape, oil spiked about $6,” said David Kovacs, an investment strategist at Turner Investment Partners.

Prices were buoyed further by a report from Morgan Stanley that predicted oil would reach $150 a barrel by July 4 because of higher demand in Asia.

Could it be the beginning of another Great Depression ?

The U.S. unemployment rate jumped to 5.5 per cent in May - the biggest monthly rise since 1986.

With food and energy prices marching upward, paychecks aren't stretching as far.

Employers worried about a sharp slowdown and their own prospects, they clamped down on hiring in May, according to the Labor Department.

The unemployment rate soared from 5 per cent in April, surprising economists who were forecasting a tick-up to 5.1 per cent.

The job losses in both March and April turned out to be larger than the government previously reported. Employers now have cut payrolls for five straight months.

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