Oil hit a 2012 low on Friday - down to less that $107 a barrel - on fears of slowing demand from the crumbling euro zone and weak economicdata from China. Seems banks and hedge funds have suddenlylost their appetite for commodity risks. Any bet based on improving growth is looking a littel rash at the moment.The dollar is also strengthening which puts futher pressure on commodities priced in greenbacks. Thats why we're seeing falls in UK pump prices this weekendand supermarket cuts of 2p a litre. One positive effect of Greece leaving the euro zone is that demand forcrude could fall by up to two million barrels a day as European growth goes into reverse. That could send oil down to as low as $60 with forecourt prices tumbling too.
Was amused when Cameron said that his meeting with Obama included discussions on measures to ease the price of oil - 'very high oil prices that translate into high prices at the pumps'. This, correct me if I'm wrong, is the very same Prime Ministerwho is allowing his Chancellor to stuff his electorate with a 16p a gallon fuel rise in duty this August. In the US high oil prices may translate to higher pump prices, but here in the UK,unsupportable pump prices are because of one thing alone. The second highest fuel tax duty regime in the world with 60p of every litre going in tax. I hesitate to apply the word hyprocrisy here, but that's what it sounds like.I'll be indulgent (for once) and say maybe this factual disconnect is because Cameron was just being matey with Obama.One thing's for sure though,if Obama tried to inflict a 60% fuel tax on the American public, his chances or re-election would disappear likea rain drop echoing into an ocean.