Thursday, January 21, 2016

Oil prices and the market decline

Wonder why is the oil price declining and along with it the all the markets? It looks like as oil company profits are plummeting, so oil company shares are plummeting, and that is dragging down the whole market. Does the lifting of international sanctions against Iran send more oil flowing into markets that are already awash in crude and also because economic growth in China, the world's second-largest oil consumer after the U.S., is slowing.
Two of the biggest oil companies in the world, Exxon and Chevron, are part of the 30-member Dow Jones industrial average. Of the 20 biggest share price losers in the S&P 500 this year, 13 are energy companies.
But this latest plunge in prices to under $30 a barrel has investors worried that oil prices are falling because global growth is slowing, as businesses and consumers in many developing countries, particularly China, cut back on spending.

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