An oil price of $80 per barrel in 2009?It's possible, so says a hedge fund firm founder, if the right factors line up.
Renee Haugerud, founder of the $2.5 billion commodities hedge fund firm Galtere Ltd. told Bloomberg News oil may fall to $80 per barrel as supplies of alternative energy sources increase.
Further, Haugerud said the surge in oil has been overdone by investors seeking holdings in raw materials through the Standard & Poor's GSCI Index, a commodity gauge weighted toward energy, Bloomberg News reported. Oil closed Friday down 11 cents to $115.46 per barrel.
Economist Glen Langan told BloggingStocks a further decline in oil to below $100 is consistent with the recent slowdown in global economic growth, but he'll await further international GDP data before arguing for an oil dip to the $80 range.
"The key here, again, as with the uptrend in the previous four years, is China. If oil consumption growth slows in China, oil will experience a large sell-off, as institutional investors and traders sense that the great bull run in commodities is at least pausing," Langan said. "China is likely to register GDP growth of about 10% in Q3, and if it's below 9% or 8.5%, investors will take that as a sign that a slowdown is ahead, which is bearish for commodity prices." China's economy grew 10.2% in Q2 and 10.4% in 1H 2008.
Still, Langan was careful to point out that the drop in oil's price in 2009, if it occurs, does not end the bullish, long-term trend for oil. Long-term, both economic development in emerging markets and modest supply increases are bullish for oil, underscoring the need to find affordable, alternative energy sources.
Oil Analysis: Regarding forecasts, there's been a noticeable increase in research arguing for a sub-$100 oil price in 2009. Still, $150 and higher forecasts exist. That may confuse investors / readers, but the apparent bifurcation can be explained by the many variables affecting oil's price, the biggest factor being emerging market growth. A slowdown in these economies would be bearish for oil's price through at least the first half of 2009.
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Reader Comments (Page 1 of 1)
8-31-2008 @ 6:40PM
william lindblad said...
This is possible, however I would not see this is a positive light.