Crude oil prices fell for a fifth consecutive trading session in London and New York Wednesday with prices falling below $30 a barrel for the first time since December. Oil analysts expect continuing price volatility in the weeks ahead.
What traders call the war rally in equities has its flip side in the slide in oil prices. Share prices in New York as measured by the Dow Jones industrials have gained 850 points in one week. For first time since August 2000 stock prices have rallied for six consecutive trading sessions. Analysts say the stock market is up because months of uncertainty appear to over. Markets assume there will be a war and that it will be short and decisive ending in the liberation of Iraq.
In the oil market, the end to uncertainty has meant a sharp drop in crude oil prices. Oil has fallen by ten dollars a barrel in three weeks. Oil analyst Daniel Yergin tells CNBC television he expects continuing price volatility.
"If you look back just five years that same oil that just a few weeks ago was nearly $40 a barrel was $14 a barrel. But it always seems to come back over time to between either $20 or $24 a barrel. But to get to those averages you go through a lot of volatility.
Mr. Yergin says oil prices for the second quarter of this year will probably average about 28 dollars a barrel. He says it is likely that at least some Iraqi oil fields will be sabotaged.
"I think you have to work on the assumption that the Saddam Hussein regime is going to try and sabotage them and we have to be prepared for some very graphic images if that eventuates," he said.
In 1991 retreating Iraqi forces set fire to oil fields in occupied Kuwait.