The price of crude oil has fallen back over the last few days with investors content to reap the rewards of their investment purchases through selling stock and holding off on any immediate purchases as the November 1st supply increase approaches.

This has seen the price of crude oil, measured per barrel, fall from its $83.90 high around one week ago to under $80 at $79.46 through trading today in light of the pending US stock inventory announcement.

The fall in price has been unexpected given the extent of the weakness of the dollar in recent weeks, which it was thought would apply inevitable upwards price pressure to crude value.  However, by virtue of its fall nevertheless, this highlights the extent of sell offs of oil inventory by investment buyers over the period.

Major oil cartel OPEC announced earlier in the summer that it was to increase production by half a million barrels a day as of the first of November this year in order to curb the rising price of crude oil.

Oil had been sharply rising as a result of dwindling supply and rapidly expanding demand in markets like China and India.  Additionally with stock markets in turmoil, oil investment was even more attractive for investors as a relative ’safe haven’ after the sub-prime unrest.

On top of that outages as a result of severe weather in the Gulf of Mexico and power problems in US refineries several months ago also added to the growing price pressures on crude oil, which it now appears are starting to subside with the US figures predicted tomorrow.

It remains to be seen to what extent US stock have fallen tomorrow, with analysts predicting that there could be yet more bad news for the price of crude oil in the immediate term on the way.

The currency will in effect reduce the number of zeros on each bank note, after the bank was forced to print $200,000 notes several months ago to cope with the rate of inflation, and it is designed to help eradicate the underground trade in currency as well as help recover the state of the Zimbabwe economy.

At the same time the interest rate for borrowing will increase to 800% in a bid to try and wrap up inflation and calm the force that has brought Zimbabwe socially and economically to its knees in recent times.

With the world’s most significant rate of inflation, Zimbabwe has been unable to afford basic supplies and raw materials for business, becoming involved in a vicious circle of printing more money to import goods from abroad.

With energy and fuel at a premium, along with the most basic of foodstuffs that have deserted supermarket shelves, the people of Zimbabwe have been suffering a tremendous decrease in living standards as a consequence of the economic problems facing the country.

Once one of the most stocked and healthy economies in the region, Zimbabwe has taken a turn for the worst, which many have attributed to extreme political policy and the dispossession of white-owned farmland.

The moves today have been criticised by analysts for refusing to address the ‘fundamental problems’ within the Zimbabwe economy, which will continue to prop up the four figure rate of inflation and ongoing currency devalution for the near future.

The Zimbabwe government have received a loan of $200 million to help buy basic provisions in order to restore the economy, although it is unknown how the government has agreed to meet its corresponding obligations for repayment.

Europe saw an overall fall in its unemployment figures to give the leading exchanges there a boost, whilst the Bank of England’s second snubbed liquidity offering was enough to send the FTSE down slightly in red at the close of play.

With more data expected to show US weakness over the course of the week, it is thought that share sell-offs may continue until the Federal Reserve meets to discuss interest rates.  It is then anticipated that shares will bounce slightly, before reacting either way to the Reserve’s comments.

The Dow Jones returned to negative business after yesterday’s astonishing performance which saw analysts buoyed by the prospect of further Federal Reserve interest rate cuts.  By the close of play today its was down 32.19 points, yet still comfortably above the landmark 14,000 at 14055.5.

The NASDAQ managed to see moderate growth on the day by comparison gaining 4.89 points to 2745.9, building on the momentum of trade yesterday.  The S&P 500 was down marginally by 1.08 points to 1546.0.

In Europe the German DAX 30 exchange was strong on the day as a result of the record low unemployment figures from within the eurozone.  It gained 24.36 points on yesterday’s trade to finish well up at 7946.8, just a good day’s trade away from breaking through 8,000.

Similarly the French CAC 40 exchange in Paris saw a similar sentiment, gaining 26.01 points on the day to secure the strong growth over the last few days on the index.  By the close of trade it was up by 26.01 points to 5799.3.

The FTSE 100 in London slid just back into red on the day as a result of the Bank of England’s rejection amongst other things, seeing a fall of 5.80 points to 6500.4.

The move came just days before the Bank of England Monetary Policy Committee is poised to meet to decide interest rate policy for the coming month, with the ongoing market unrest likely to feature in any decision the committee makes regarding policy.

In the statement by the Ernst & Young Item Club today, a respected economic forecasting body, a cut in interest rates would help promote investor confidence at the Bank of England and drive investment in business and the economy as a whole.

The sub-prime lending fallout in the US has spread on a global scale, resulting in uniform liquidity pressures and ongoing dangers to lenders and businesses reliant on credit for expansion projects.

It is hoped that any interest rate cut, despite seeming an unlikely outcome, would help both borrowers and lenders in the finance industry, as well as promoting the interests of business on the whole.

Interest rates currently sit at 5.75% after five successive rises over the course of the year.  Many analysts had previously forecast that rates would continue in their ascendancy towards 6.0% over the course of 2007, although sharply dropping inflation figures were quick to put paid to this kind of speculation.

Now with ongoing market turmoil forecast to cost the UK economy as much as 1% from its economic growth figure for the next year, it is quite possible that the Bank of England will heed the warning of analysts today and cut interest rates later this week.

However the majority expectation still remains that rates will be maintained at 5.75% over the course of the next month following the Monetary Policy Committee’s meeting this week.

The full rate for minimum wage has increased from £5.35 an hour to £5.52 an hour, leaving the average minimum wage earner with an extra £7 a week in pay.  Meanwhile the rate for 18-21 year old employees has increased to £4.60 from £4.44, and 16-17 year olds will see a rise of £0.10 an hour to £3.40 at statutory minimum.

Also in force as of today is the requirement to give 24 days a year in annual leave to full time employees, as opposed to the previous minimum of just 20.  This will continue to rise incrementally to 28 days in 2009, to bring the UK in line with conditions elsewhere in Europe.

Whilst the move has been welcomed by trade unions, many industry analysts and employers have felt that the cost to the economy will be significant in terms of both inflation and loss of taxation revenue.

With income increasing, consumer spending is likely also to see a boost which will inevitably drive up prices.  Furthermore business owners, particularly those with substantial wage bills at present may have to increase product prices in order to counteract the effect of the wage increase and maintain margins, which could ultimately cancel the effect altogether.

According to a report released today by the British Retail Consortium, the cost of the minimum wage increase last year to retailing businesses alone was in excess of £1.7 billion, looking likely to cost the same if not more this time around.

In terms of public revenue, the excess wages will fall to be taxed within the 22% income tax bracket, whereas it would previously have been charged at a marginal corporate rate of 30% for many of the large retailing chains, according to experts in public finance.

The Japanese postal service Japan Post will begin its fragmentation today amongst the private sector organisations that have won contracts for the initial term, and will see the organisation split into four distinct branches to reflect the diverse extent of its operation.

The proposed move will take in all a decade to complete, provided the transition moves according to schedule, and is designed to generate significant public revenue as well as improving service provision through increased competition within the private finance and courier sectors.

The move will split the operation into banking, insurance, deliveries and post office divisions, which will in the process create the world’s largest commercial bank with over 400 million accounts and $3 trillion in assets.

The privatisation was welcomed by the stock market upon its announcement in 2005, which saw analysts invest on the anticipation of the shift to the private sector.  It is expected that both the banking and insurance operations will be traded on the Nikkei within the next five years.

Whilst designed to increase the level of competition in the Japanese banking sector, the move is also likely to create more jobs and fuel economic growth, as a result of introducing more capital into business markets to fuel corporate expansion projects.

Additionally the privatisation may help to ease the current credit crunch environment by enabling a fresh cash injection into the finance sector, taking much of the pressure of current lenders suffering from liquidity problems.

Lenders across the globe have noticed a squeeze on liquidity as a result of higher inter-banking lending rates and increase mortgage defaults in the US sub-prime sector.

News of US consumers continuing to spend was a welcome relief from the woes of recent months, and a sign that the US economy may not be as troubled as many analysts had thoughts.  Conversely German consumer spending was down on the day, and global oil markets suffered yet another day of upwards price pressure.

Overall the mood tended to be down with the threat of global inflationary pressures derived from inflated oil trading at the forefront of analyst thinking, which saw markets tend to trade negatively across the board.

In London, the FTSE 100 was amongst the heaviest losers of the day despite not suffering too badly from the sell-offs.  By the closing bell, the FTSE exchange was down by 19.60 points to close at 6466.8, after what has been a largely successful week of trade.

In the US, both major stock exchanges saw a downturn on the day, but again only marginally to round off largely positive weeks.  The Dow Jones leading index lost 17.31 points on the day to close down on the bell, finishing at 13895.6.  Meanwhile the NASDAQ exchange was down 8.09 points, closing at 2701.5.  The S&P 500 was down 4.63 points to 1526.8.

European markets enjoyed mixed trading on the day as a result of a combination of economic indicators, which could have seen results swing in either direction.

In Paris, the CAC 40 exchange was up there with the FTSE in terms of losses, closing down by a proportionately high 17.68 points against a value of 5715.7.

Finally, the DAX exchange in Germany was the only major exchange to buck the overall trend, coming in up marginally by 7.72 points on the day to 7861.5.

Former French finance minister Dominique Strauss-Kahn was unveiled today as the new leader of the International Monetary Fund, after having received the backing of support from the US and Europe early in the candidacy campaign.

His only other contender, former Czech Prime Minister Josef Tosovsky was Russia’s nomination for the position, which many analysts saw as a protest against traditional Europe/US dominance in world financial authorities.  Few experts had given the late nominee any chance of success over Strauss-Kahn.

Mr Strauss-Kahn will assume his position during the course of next month, succeeding the current boss Rodrigo de Rato who announced his retirement for personal reasons from the top position within the IMF.

The International Monetary Fund has been criticised as an ineffective and pointless organisation, with too much influence from rich Western nations making it an impossible forum for balanced debate and decision making. 

It is responsible for assisting developing economies with financial aid projects, although it is largely dominated by what some have dubbed to be unfair power share practices between the US and Europe, which see minority nations pushed to the fringes of the decision making process.

Dominique Strauss-Kahn has pledged to reform the way in which decisions are made within the 185-nation strong group, tackling the issue of voting rights and responsibilities for determining the direction of fund distribution.

Mr Strauss-Kahn received the formal news of his appointment whilst on a politically motivated trip to Chile, which was designed to reflect his ongoing commitment towards allowing developing nations to have a say within the IMF structure.

Through trading in Asia today the price of oil per barrel broke the landmark $83 point, up at just below $84 to close at a new record high, as markets continue to demand beyond the realms of current supply, prior to November’s planned supply increase.

The recent heavy devaluation of the dollar on world currency exchanges has resulted in oil prices soaring, reflecting the fact that the dollar is now worth less than before internationally as a result of its poor economic performance of late.

Unfortunately for the global economic climate, the ongoing upwards price pressure on crude oil looks set to continue to have an adverse effect on economic growth and inflation, as an essential component in manufacturing processes and fuel which will inevitably lead to consumer price inflation.

OPEC, the cartel of nations responsible for 40% of the global crude oil output, has pledged to step up supply by an extra 500,000 barrels a day as of November this year, in an attempt to ease the current supply shortage and strong vertical price pressures.

However, many analysts are fearing that strongly growing demand from Eastern markets and periodic output problems over the last few months will see oil prices continue to rise, even after output does increase initially.

And with severe weather patterns across major output channels predicted over the coming months, as well as political problems within Nigeria including abductions and shootings in recent days, the problems for crude oil look set to continue over the immediate future, with experts predicting it could rise as high as $85 a barrel before too long.

The figures had been anticipated to be disappointing, which had seen a sell off on the greenback on world exchanges this morning and an optimistic Dow Jones predicting further interest rate cuts to be right round the corner as the Federal Reserve gear up to make their next rates decision.

The number of new family homes selling nationwide dropped almost 8.5% on the month to hit the lowest rate of home sales in over seven years.  Whilst analysts had previously forecast negative results, the outcome of the figures launched today is far more pessimistic.

On an annual basis, the sale of new homes fell to 795,000, down from 867,000 just one month before, reflecting that the situation in the US housing market is only continuing to get worse.  With the market stagnant for several years now, the news has been taken to suggest that the acute problems in the sub-prime lending sector hand now begun to spread throughout the US economy.

The sub-prime lending sector, responsible for providing high risk to yield ratio mortgages to those with patchy credit histories was exposed to over selling on self certification.  As a result, successive Federal Reserve interest rate rises began to increase the number of foreclosures and mortgage defaults, which began to tie up bank liquidity and prompt a tight credit crunch atmosphere.

Businesses have suffered the effect of a lack of readily available finance, whilst consumer confidence has hit rock bottom.  As a result, many analysts are suggesting that today’s figures indicate the problem could be having a spread effect on the wider US economy.

Meanwhile, the average sale price of news homes fell to its lowest level in over two years, down to $225,700, or £112,000, further highlighting an ongoing lack of demand for homes throughout the US.