Oil has gotten as low as $94 today. That is down from an all-time high of $147. Yesterday, crude sold down almost $10.
There is a case to be made that oil has much further to fall.
The first part of the argument is fairly simple. As the economy is crushed in the US and EU, demand for fuel and petrochemicals falls through the floor. Demand for China's exports also falls because consumers shut down their buying of everything but the essentials. China's need for crude drops as well.
Under those circumstances, if OPEC does not sharply decrease supply, oil will almost certainly move down by at least a modest amount.
But speculation may have just as great an effect. No one was able to fix a number on how much speculators helped drive crude prices up earlier this year. They had a role in it, and some government agencies and Congressional staffers think oil may not have ever moved above $120 without a push from those trying to make money on artificial price inflation.
Speculation cuts two ways. If those buying futures begin to gamble that oil will move down and if they begin to short crude, the downward push on oil could become significant.
Speculators may have done a lot to hurt the economy by pushing oil prices up. Now, perhaps they can do some good pushing prices down and make a ton of money in the process.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
9-30-2008 @ 7:50AM
Sachin said...
yes I believe it will move below $90 if not below $80
Sachin
http://qtp.blogspot.com
9-30-2008 @ 9:21AM
Bill P said...
The price of crude isn't falling because of fears of reduced demand, but because the inflation fears subsided when the bailout failed. A new mega-bailout will only stoke inflation and drive oil and other commodities skyward
9-30-2008 @ 9:30AM
beachpaul said...
I just told the oil man no to a $3.79 lock in for heating oil this season. If the "meltdown" is coming(not) heating oil should be cheap. But, wait, we don't have a "free" market anymore Comrade Cramer. It is a "rigged" market, and I'm supposed to "bail" it out. Silly me, I better call him back!
9-30-2008 @ 10:52AM
EMIL J KOVACH JR said...
CRUDE OIL Was 84.00 In January,
It Is Still Higher, Then Most January, Stock Prices, So It Will Probably Find A Real Market Value, Soon.
Crude Has Performed Remarkably Well, It Is More Stable, Then Other Markets.
OPEC, And others Have Not Tried, To Manipulate This Market, MANIULATION Rarely Works, Anyway.
SPECULATORS Ruled This Market, For A While, But Speculation, Has Mostly Left, Here.
The Market Is Finding The Real Price, As It Is In Other Commodities, Not Driven By Speculation.
OPEC Has Not Panic'd, And I Suspect, Will Not.
EMIL J KOVACH JR
9-30-2008 @ 11:17AM
EMIL J KOVACH JR said...
Bill P Says...Inflation Will Bring Up The Price.
INFLATION? What Inflation, Look Around Buddy,Housing Prices, Consumer Demand, Here, And Abroad, Is Going DOWN.
Inflation, On This "Bailout" Package, Is So Far, In The Future, You Can Not Seriously Consider It Now.
I Think DEFLATION, Is The Near Future.
Markets Are EQUALIZING,
Your House Value Went Down, But Guess What, So Did Everybody Elses'
EMIL J KOVACH JR
9-30-2008 @ 11:27AM
EMIL J KOVACH JR said...
"Data from Japan is showing oil demand in August down 11.8 percent from a year ago," said Olivier Jakob of Petromatrix in Switzerland, adding that the International Energy Agency, the Paris-based energy watchdog, would have to make "drastic revisions" to its oil demand figure. "
Note: DRASTIC REVISIONS
EMIL J KOVACH JR
9-30-2008 @ 12:40PM
EMIL J KOVACH JR said...
"T. Boone Pickens is pretty calm for a guy who lost more than a billion dollars.
"The Texas energy tycoon has put his considerable wealth behind a renewable energy effort, saying he’s sick and tired of seeing America send all of its money overseas to pay for imported oil. But he’s also suffered a considerable loss on his energy investments: He “missed the turn.” (His Quote)--Web Article
T. Boone Pickens, And His Hedge Fund, Were Speculators.
CRUDE OIL, Is Finding The Real "Market Value", Not The Speculation Value.
Speculators Have Lost BILLIONS--In The Last Few Weeks
EMIL J KOVACH JR
9-30-2008 @ 1:56PM
myoil said...
I want the Arab man to go to streets and just begin drinking oil when they see the surplus due to low demand.
Let's get the electric car on the road. Good on you GM, I saw the car and it is expected the car will be in the market in 2010!!!
By bye to ARABIA!!!