This improvement is largely the result of the recent declines in energy prices. The price of crude oil has fallen about onefourth since its recent peak, reflecting some easing of geopolitical concerns and other factors.
In particular, participants in crude oil markets - still mindful of the devastating effects on energy supplies of the hurricane season in 2005 - appear in retrospect to have incorporated a substantial risk premium into spot prices earlier this year. In the event, no damaging storms occurred this hurricane season.