Sign in Subscribe
Petroleum industry

Global Economic Rebound Slows as Crude Oil Prices Decline

Strategic Insights

— 1 min read

The global economic rebound is showing signs of slowing down, with manufacturing growth from China to the euro region weakening in May. This weakness has led to speculation that the economic recovery may be faltering. Crude oil prices in New York dropped the most in a week, following energy-company shares lower, after BP Plc failed to halt the flow of oil from a leaking well in the Gulf of Mexico. The decline in crude oil prices has significant implications for the global economy.

Key Takeaways:

  • Crude oil for July delivery lost $1.39, or 1.9 percent, to settle at $72.58 a barrel on the New York Mercantile Exchange, marking the biggest monthly decline since December 2008.
  • The Standard & Poor's 500 Index fell 0.6 percent to 1,083.13 at 3:10 p.m. in New York, with the S&P 500 Energy Index dropping 2.9 percent, the biggest decline within 10 groups in the U.S. equity benchmark.
  • BP's shares plunged the most in 18 years in London trading, losing 13 percent to 430 pence, while Anadarko tumbled the most in 18 months on the New York Stock Exchange.
  • The euro weakened against the dollar, reducing the appeal of commodities as an alternative investment, with the European currency losing 0.6 percent to $1.2237 at 4:11 p.m. in New York from $1.2306 yesterday.
  • A gauge of manufacturing in the 16-member euro region declined to 55.8 from 57.6 the previous month, according to London-based Markit Economics, below an initial estimate of 55.9 released on May 21.
  • The explosion at the BP rig in the Gulf of Mexico, which killed 11 workers, is estimated to have caused extensive damage and could hinder oil production for several months.

Statistics:

  • Crude oil futures have risen 5.8 percent in the past year.
  • Crude oil prices dropped 14 percent in May, the biggest monthly decline since December 2008.
  • The S&P 500 Energy Index retreated 17 percent since peaking April 23.
  • The euro touched $1.2111 in earlier trading, the lowest level in four years.
  • A separate index released by HSBC Holdings Plc and Markit Economics decreased to the lowest level in a year.

Sources:

  • Euclid Infotech Pvt. Ltd.
  • Strategic Energy & Economic Research
  • London-based Markit Economics
  • HSBC Holdings Plc
  • Albawaba.com

Read more