Monday, October 19, 2009
Rising Oil Prices
Could the rising oil prices possibly stunt the current stock rally? The stock market is currently on the rise. However, the rising oil prices might stunt that stock market rally. The price of oil has been on the rise because investors have been anticipating a stronger global demand as many factories come back to life. The price of a barrel of oil has jumped to over $78 which is a 76% jump in 2009. The amazing 20.4% jump in the stock market cannot overcome that kind of a jump in oil prices though. The rising oil prices weren't a problem for the stock market in 2007 until the price per barrel reached $80 which is the level historically that energy prices start negatively affecting consumer behavior. If the price per barrel of oil reaches $80, people should begin to worry about the stock market rally. People have been pleased how their stocks have been increasing, but the rising oil prices might spoil the current stock market rally.
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Do you know what the price of a barrel of oil was last winter?
ReplyDeleteNovember 2008 the price per barrel was around $90.
Here are some prices and the adjusted inflation prices for the year since 2000. Notice in 2000 the price per barrel was around $34
Year Nominal Inflation Adjusted
2000 $27.39 $34.29
2001 $23.00 $28.03
2002 $22.81 $27.33
2003 $27.69 $32.47
2004 $37.66 $42.97
2005 $50.04 $55.21
2006 $58.30 $62.36
2007 $64.20 $66.66
2008 $91.48 $91.35