Investors thinking about positioning themselves in oil stocks, or in other stocks that would benefit from higher oil prices may want to wait awhile. Global oil demand -- a major factor in determining oil's price -- is expected to decline in 2009 by 1 million barrels per day (bpd), the International Energy Agency announced Friday in its latest monthly report.
Even more significant, the IEA also decreased its 2008 global oil demand estimate by 70,000 bpd to 85.8 million bpd, a reduction which means oil demand dropped 0.3% in 2008 and is forecast to decline 0.6% in 2009 -- the first 2-year decline in global oil demand in 26 years, or since 1982-1983.
Oil fell 13 cents on Friday at mid-day to $35.24 per barrel. Oil has fallen an astounding $112.03 since hitting a record high of $147.27 per barrel in the summer of 2008.
Further, Energy Trader Jim Dietz told BloggingStocks Friday there are more declines ahead for the world's most important commodity.
"There's nothing on the economic scene in the U.S. or in Asia, two key oil users, that suggests oil demand will increase. That means we'll test $30 per barrel, probably within the next few weeks," Dietz said. Dietz added that he was presently short unleaded gasoline, with a monthly contract.
Will $30 represent a bottom for oil? "Too soon to tell," Dietz said. "We have to see what first quarter U.S. GDP looks like. We've got a [U.S.] fiscal stimulus package coming up, but it will be a few months before we know how much it increases GDP by. Until we know where GDP is headed, predicting a bottom for oil is just a guess."
Oil / Economic Analysis: As trader Dietz noted, the path of least resistance for oil, from both technical and fundamental standpoints, remains lower. Hence, those attempting buy-related energy plays are hereby put on notice.
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Reader Comments (Page 1 of 1)
3-07-2009 @ 12:47PM
bci said...
I'd for once LOVE to hear from analysts that DO NOT have a position. How can anyone believe rhetoric from someone with an interest in seeing oil go down, telling us oil will go down. Much rather own oil than some up-in-flames 'bank' that acts irresponsibly.