Is Crude oil heading for a crash ?
The Crude oil prices have zoomed to above 80 dollars for the last few days , thanks to continuing strength in China and also in US. There are major hopes that the European crisis would be contained, and there would also be a sustained recovery in the US economy.
But in reality, we could face a sharp downturn in the largest performing economy i.e, China, because inflation is slowly going out of control there. And that could pull down the imports from US and other countries into that country.
That could have a big negative impact on the entire global economy, only because the recovery in Australia / South Korea / Indonesia / South Africa / Russia / Middle East / India, are strongly linked to the Chinese growth. Any loss of momentum in Chinese growth in the coming months could spin these countries out of order.
That is precisely the reason why none of these countries have withdrawn the stimulus plan in spite of reporting decent to very good GDP growth in the last few quarters.
US is still running high on unemployment, and there are signs of the housing crisis not recovering in the next six months at least.
So all these things could well pull down the demand for crude oil in the coming months, and it would not be surprising if crude oil prices go down below 65 dollars mark shortly.
