A couple of months ago, I would have bet that oil would probably peak out this summer in the upper $60's, and possibly move back through the psychological $70 mark, but it is starting to look like I would have been wrong. We have yet to hit the heart of the high demand summer driving months, and oil is already poised to break through $70 a barrel.When we looked at oil prices yesterday we mentioned that the first place you are going to feel the recent jump in price is going to be at the gas station. And today, you will be seeing another slight jump in price as the national average for a gallon of gasoline moved over a penny higher last night to a current national average of $2.525.
Oil traded up as high as $69.05 earlier in the day, and is currently sitting at $68.67, up $0.09.
At the current price, gasoline has managed to move over 45 cents higher a gallon during the past three months. It wasn't that long ago (May 20th in fact) that the "experts" were predicting that we would see $2.50 gasoline at the peak of the summer... well, they were wrong, we are seeing it right now. There really is no telling at this point just how high a gallon of gasoline will reach before the summer is through.
There is still a large amount of speculation in current oil prices, and it would be hard to argue that the fundamentals are in place to justify $70 oil at this time, but conditions are definitely in place to ensure that oil prices at least remain at current levels, if not continue to rise over the next month or so.
The dollar has been fading, China has been showing signs of life again, and Americans are starting to think that the worst of the current recession is behind us. should these bullish sentiments start to erode, even just a little, we could see oil quickly reversing course back down into the $50's, but I do not think we will be seeing that any time soon.
What are your predictions on oil prices this summer? Will they keep climbing, remain the same, or make a retreat from the recent rally?
Here is a chart for oil so you can see just how it has been moving lately:
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Reader Comments (Page 1 of 1)
6-02-2009 @ 8:03PM
Ben said...
Like Cramer always say, the market will continue to rally, why not oil. Obviously we are out of recession already.
I say rally back to their all time high, and break out even higher. $6 a gallon why not?
6-02-2009 @ 8:42PM
daveandjoybrady said...
$6 a gallon are you freakin stupid that would have tothe dumbest thing i've ever heard. I hope your kidding. or your just an ignorant guy with way to much money. $6 a gallon go dig a hole and bury yourself in it.
6-02-2009 @ 9:24PM
cnsjjc said...
I remember my father selling premium grade Oil City Pennsylvania oil for $11/Barrel - My how times have changed.
6-02-2009 @ 10:29PM
robertk2010 said...
This is not supply and demand, the market is only moving because the pension funds are trying to create a bottom to the market by pumping 400 billion into the stock market. Banks are still illiquid and job losses are accelerating. There is a disconnect between this ralley and reality. Just as those betting oil prices over $140/barrel because the argument was demand could only go up. That bubble popped, and so will this rally in oil prices as inventories will be filled up in another 1-2 months. Demand is only moving slightly in Asia as China takes advantage of low prices to stockpile millions of barrels. This is short-term. The economy in the US is still contracting and so is oil consumption.
6-02-2009 @ 10:29PM
robertk2010 said...
Like Cramer always say, the market will continue to rally, why not oil. Obviously we are out of recession already.
-- High oil prices will cause another recession. The US economy cannot last with expensive oil. Either oil is cheaper or American consumerism is over. If the latter, then heaven help the dollar free fall.
6-02-2009 @ 11:39PM
JCH said...
The US economy has to learn to exist with high oil prices. There is no other choice. High oil prices will be a part of our economic realty from now until the end of oil. The days of cheap oil are dead and gone - ancient history.
6-03-2009 @ 1:02AM
hyperpiz said...
Oil-price only at $70??? F*CK, why not just shoot it to $500 bbl and shoot gasoline to $25 gallon!!! Quadrupling the economic disaster it brought from last year when Wall Street manipulated oil-price to $150 and shot gas at $5.50 at the pump! Can't wait to see all 50-States shatters and splits to bits and pieces!!!
At $500 bbl, perhaps then these IDIOTS government officials will realize Wall Street is the ROOT of all CORRUPTIONS & the DESTRUCTIVE DISEASE CANCER in any economic subjects! OH! On second thought, why not just shoot oil-price to $1,000 bbl and shoots gasoline to $80 on the gal and be done with it!!!
6-03-2009 @ 1:02AM
historicgamer06 said...
6-02-2009 @ 8:03PM
Ben said...
Like Cramer always say, the market will continue to rally, why not oil. Obviously we are out of recession already.
I say rally back to their all time high, and break out even higher. $6 a gallon why not?
---------------------------------
Apperently you know nothing. Because we are not out yet. Its starting just starting to lighten up. Why not live with high prices? because it will put us right back into a declining recession. Just as the other guy said go dig a hole.
6-03-2009 @ 7:34AM
al coholic said...
Hello! Since the price of oil is in dollars and the dollar is lower why should we be surprised that the price of oil is getting higher?
The answer is right there in your post. "The dollar has been fading"......Bingo!
6-03-2009 @ 1:23PM
Iridium said...
Why because even the falling value of the dollar doesn't justify the price. The value of the dollar is currently higher than it was during the runup last year.
We have to remember that all currencies took a value hit in the fall. The dollar has been trading under 100 yen for over a year.
Even a low value dollar could only justify $30 a barrel right now. It doesn't cost anymore to pull a barrel of oil out of the ground than it did when oil was $18 a barrel.
Remember when they said it would be profitable to drill on the bottom of the ocean with oil at $40 a barrel. I remember that. It is just too bad that traders have a long term memory of 24 hours. All that matters is up vs yesterday or down vs yesterday. Anything that has happenned in the past is of no consequence.
6-03-2009 @ 3:47PM
Ben said...
How dare anyone of you tell Cramer to dig a hole and bury himself.
Cramer is telling everyone to buy again today.