The same day as the king opened Parliament, came more bad news for the Norwegian economy:
- The economic stagnation in the euro could push the European Central Bank (ECB) to print money.
- Thursday continued oil price its decline for the third day in a row.
- It triggered the stock market decline. The main index of the Oslo Stock Exchange fell 2.85 percent – the biggest drop a single day for over two years.
The price on the spot market in the North Sea oil Brent Blend dropped from about $ 94 per. barrels for well under $ 92 per. barrel at the lowest.
Thursday afternoon price rebounded slightly back and was at 16 o’clock around $ 92.50 per. barrel.
Huge price drop
Since the start of Tuesday of this week, thus the oil price dropped from around $ 97 per. barrel to around just over $ 92 per. barrel. A month ago the oil price was just over $ 100 per. barrel.
Oil analyst Thina Saltvedt brokerage Nordea Markets says oil market has turned around.
– In particular, demand in Asia were weaker than expected. At the same time, production has increased in major producing countries. Thus, the price falls, she says.
Saltvedt expect that prices will pick up again during the winter when the heating season in Europe and the USA starts.
– But much will depend on how Saudi Arabia considers market. This is the only country on its own can affect oil prices by varying recovery, she says.
Worse mainland
Lower oil works inward on the mainland. The outlook is further exacerbated for all companies that supply goods and services to the oil sector.
In Ålesund followed Governor Øystein Olsen up the king’s concerns.
– If oil prices continue to fall, it eventually get to a point where we must reevaluate our estimates of future oil investments, Olsen said according to Reuters.
In its current estimates predict Olsen oil investment will fall 10 percent next year before they level off and rise again in 2017.
If there is a little bewildered mood of the king and the Norges Bank, so look there anyway worse in Europe
Interest Meeting in Naples
Euro countries are dangerously close to a new economic downturn. Growth has stopped completely, inflation is close to zero and there is no sign of lower unemployment.
ECB chief Mario Draghi has for all practical purposes have burned themselves in the interest rate weapon to relaunch the economy after the policy rate was lowered from 0.15 percent to 0.05 percent on microscopic monetary policy meeting in September.
The expectation is that the ECB decides to print money to spur the economy and the central banks of the United States and Britain have made long. The decision did not come yesterday, but it can approach.
– But it is obvious that the pressure on the ECB is increasing, and in fact seemed Draghi to be more on the defensive than he has been in previous press conferences, writes Chief Economist Øystein Dørum DNB Markets comments.
Prolonged crisis
Draghi said after the meeting that the bank is prepared to adopt more unconventional measures to prevent inflation keeps low for too long. The fear is deflation – a sustained period of falling prices – which in this case is going to intensify and prolong the euro crisis as soon has lasted five years.
after the monetary policy meeting of the ECB Thursday said Draghi that the central bank later this month will start buying up bonds. These are securities with a particularly high security, such as loans to the public sector or mortgage.
Oil Investments
Here at home taking director Erling Kvadsheim in industrial organization Norwegian oil and gas is currently quiet.
– We are coming down from an exceptionally high level of oil investment to a high level. We will not help to dramatize this. So far there is no reason for it, he said.
Kvadsheim think it still can be “dramatic” if oil prices fall further and remain low for long. Oil companies and suppliers on the Norwegian continental shelf are members of the Norwegian oil and gas.
Earlier this week came new figures showing that inflation fell from 0.4 percent in August to 0.3 percent in September. It is far from the target to the central bank on inflation of just under 2 percent.
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