27 February 2012, 18:00  Oil prices rise sharply

Oil prices have been climbing sharply and steadily in recent weeks, with the black gold ending last week at a 10-month high. Along with oil, gas prices have also begun skyrocketing, pinching the pockets of consumers, who have showed surprising resilience despite the fragility of the economic recovery.
According to BMO Capital Markets gasoline accounts for about 4 percent of personal consumption in the U.S. and the price of gasoline is estimated to exceed the $5 per gallon level, given the consistent increase in oil prices since September 2011. Every 10 percent increase in gas prices would mean that 0.4 percent of spending is either rerouted to gasoline or savings are drawn. Such a development does not bode well for consumer spending, which has been seeing a volatile trend.
Meanwhile, the turmoil across the Atlantic may be far from over. After European leaders negotiated an agreement to release funding for Greece, the G20 leaders were relatively intransigent. The G20 finance ministers and central bank governors, who met over the weekend, called for further enhancement of Eurozone's bailout fund before the rest of the G20 nations can consider increasing their contribution to the International Monetary Fund's resources.
That said, recent data points have suggested a definitive upturn that is real and has come to stay. Existing home sales surged up 4.3 percent month-over-month in January, while economists had expected a much more modest increase. Single-family home sales rose 3.8 percent compared to an 8.3 percent jump in the sales of condominiums. Inventories of existing homes fell 0.4 percent to 2.31 million homes, while inventories measured in terms of months of supply also declined to a 6-year low of 6.1 months. The median price of an existing home fell 4.6 percent month-over-month to $154.7 million.

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