The FTSE ended the week at 5,529.90 taking the fall for the first half of the year to 14.4%, the worst performance of the index since 1994 when it fell 14.6%. The continued sell-off of stocks came as oil hit $142.69 a barrel, news which reverberated around world markets. Analysts had initially predicted a poor start to the year, but with better prospects for the second half of 2008, however this optimism is waning and so it could be a bumpy ride all the way in to 2009.

The cost of oil eased back from its New York trading session high of $139.89 to end the session at $138.86. This despite the news that Saudi Arabia has agreed to increase its oil output by 200,000 barrels per day. This takes the increase to 550,000 per day and is the highest output figure from the Saudi’s since August 1981. (more…)

The strike by oil tanker drivers is impacting on Shell petrol stations throughout the country and is likely to have a knock-on effect to other forecourts as Shell garages run out of fuel. Shell say their contingency plans are working well and people are not panic buying. However when people are told not to panic buy, they invariably do and it has to inevitable that fuel stocks start to run low. (more…)

Oil prices ended the week at over $139 a barrel following a two-day rise of over $16. Whilst some analysts are saying the increase is merely due to speculation and prices will soon fall, the majority of commentators do not believe this to be the case. In fact the cost of oil looks likely to pass the $150 a barrel marker over the next month and could go all the way to $200 a barrel over the coming months.

The news has sparked concerns that although the economy is slowing, increasing inflationary pressures on oil, fuel and food look set to drive interest rates higher. Whilst the UK kept rates on hold, the European Central Bank has given a strong hint that it will push up rates. All in all it is not a good time for the economy and the consumer.

Increasing oil prices and the knock on effect to aviation fuel has led Qantas, the Australian airline, to ground some of its planes. A review of its international flight routes is currently underway and announcements will be made next week on the extent of the cuts. Domestic routes are also likely to be affected but these will be a few months away. Increasing fuel costs and route cutting will inevitably impact on jobs and redundancies are also expected to be announced.

Only earlier this week American Airlines decided to delay its proposed expansion of routes to the China due to fuel costs. It has to be only a matter of time before UK carriers take the same, tough decision.

Argun Murti, an analyst at Goldman Sachs, has predicted that crude oil could top the $200 a barrel marker in as little as six months. The news came as US light crude rose above $122 for the first time yesterday. Murti does have a track record in correctly predicting oil price movements as 3 years ago he was the first to suggest oil would head above $100 a barrel.

Whilst it is the global demand, notably from China and India, that is drving prices higher, the man in the street will be more concerned about the impact on domestic fuel and petrol prices which continue to rise.  With around 67p of the price of a litre of petrol going to the Government in tax it is within their powers to alleviate some of the pressure.

The two day strike at Grangemouth has sent US light crude oil prices up to a high of $119.40, down slightly from its peak of $119.93. The strike at the oil refinery has led to the closure of the Forties pipeline which provides around a third of the UK’s oil output. In turn this has resulted in the loss of production of around 700,000 barrels pe day from 70 platforms.

Whilst the strike may only be for two days ti will take a full day to re-open the pipeline and up to a week before Grangemouth is again operating at full capacity.