Sentiment among German analysts and institutional investors declined sharply in August according to the ZEW index of the Mannheim-based ZEW Center for European Economic Research. The index fell 3.1 points to 45.3 from 48.4 in July. The index measures the difference between those who expect conditions to improve over the next six months and those who expect conditions to remain the same or worsen. A positive number reflects an excess of optimists over pessimists.

The excess of optimists has been declining since last December. The excess is now 25.1 points below the peak of 73.4 reached at that time. Rising oil prices during this time have been dampening sentiment. However, the recent sharp increase in oil prices and the realization that oil prices may continue at or near current levels, has raised doubts over the continuance of the global upswing, intensifying the negative sentiment of analysts and institutional investors .

The attached chart shows the ZEW index and the European Free Market Price of Brent Crude Oil, plotted on an inverted scale. An estimate of the August average price of Brent Crude, based on the first two weeks of August--$42.96--is not plotted.