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Oil prices are set to soften further this week after data showed a slowdown in business activity from Europe to the U.S. and China reflecting continued deterioration in the global economy, according to CNBC's weekly survey of oil market sentiment. Middle East tensions and the U.S. hurricane season may limit the declines.
Overall, weaker energy prices are being viewed as a 'tax cut' and a form of stimulus for consumers, some economists say, as gasoline prices dip below $3 a gallon in some U.S. states.
Lower commodity prices are a “silver lining” keeping inflation tame and offering central banks room to ease policy, said Dominic Rossi, Global CIO, Equities at Fidelity Worldwide Investment told “Squawk Box” on Wednesday.
Lower prices at the pump may provide a boost for demand this summer driving season in the U.S. though it’s doubtful it'll be enough to have a lasting impact on prices when macro-economic concerns continue to weigh.
“Forecast of future demand is driving the market and a perfect storm of a U.S. slow down, European crisis, and Chinese hard landing is brewing causing market participants to finally fear downside risk in crude prices,” said Kirk Howell, chief operating officer of SunGard's Kiodex, who has a “bearish” view in the short term.
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