Crude oil prices extended losses in Asian trade today after it fell yesterday to the lowest in four weeks at $81.28 a barrel, as the latest economic data shook confidence in the US economy with continued fears that energy demand will crumble if the world is engulfed by another recession also concerns over the future recovery in the global economy in light of the crises experienced by the global financial markets added to the dilemma.
Light sweet crude oil opened today at $81.57 a barrel recording the intraday high at $81.59 a barrel and a low of $79.61 a barrel and is currently trading around $79.80 a barrel.
Oil prices were also dampened by a stronger dollar, seen as a safe-haven currency in times of crisis, as the USDIX which measures the dollar's performance against other six major currencies opened today at 74.21 recording the highest at 74.46 and the lowest at 74.18 and is currently trading around 74.44.
On the other hand, oil found more reasons to fall within the huge saleoff across global stock markets and investors' ongoing attempts to get rid of risky assets, whether in commodities or currencies markets.As the yen, the dollar and the franc dominated the course of events in the currency markets, gold was the biggest winner in the commodity market, making the safe haven investment the owner of green screens within a wave of selling.
The downbeat US economic data such as jobless claims, regional manufacturing and inflation provided a fresh blow to shaky investors' confidence along with the downgrade of the credit rating in the United States, as it's the world's largest oil consumer which has increased expectations that the demand on oil will falter pushing crude prices further to the downside.
As for China, which is the world's second largest oil consumer, the Chinese government is still working to limit the expansion of economic growth by more than this through further actions to reduce the liquidity available in the markets and thus affect the field of investment, lowering expectations for the second largest oil consumer in the world.
Amid the sluggishness in global economies, oil prices may be prone to further downside pressure, especially with the drop in shares and incline in the dollar.