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The price of oil is falling, and it may stay down for some time. But prices could well remain in the $90 range.
Saudi Arabia has indicated that it could increase production by two million barrels a day, according to The Associated Press. President Bush has urged the kingdom to release more oil.
Signs of a recession in the U.S. would indicate that demand here should fall off as consumers cut back on purchases of gas and heating oil.
Even with these two pieces of news, oil trades around $92. There are factors that could keep it there which, in turn, could undermine a recovery in the U.S. economy.
Oil prices are still being driven by concerns that political problems in countries like Nigeria could interrupt the flow of crude. There is also a long-term trend of oil-producing countries keeping more of their production "in country" for emerging infrastructure building and a rising number of cars.
Many analysts believe that the cost of finding and pumping new oil will continue to make building reserves more difficult and that rising demand in Asia will stretch current supply capacity.
Oil prices are dropping, but the floor may now be in the $80s, well above where crude traded a year ago.
Douglas A. McIntyre is an editor at 247wallst.com.
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