Analyst Predicts $50 Oil

Blogging Stocks:

Think the price of oil can remain sky-high amid a U.S. recession, a global economic slowdown, and the worst credit market conditions in decades?

Think again.

Oil prices are headed back to $50, according to analyst at an investment firm based in Russia.

Chris Weafer, analyst at Uralsib Capital in Moscow, said the Russian market is projecting that oil prices will plunge to about $50 per barrel, The Wall Street Journal reported Tuesday. Amid a U.S. recession and a global economic slowdown, oil has fallen about 38% to $91.07 per barrel after hitting a record high of $147.27 per barrel in July.

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Comments

[raker]

Remember three months ago? All the genius analysts were on CNN and NBC telling us the price is due to competition from India and China. They scoffed at the suggestion that $140 a barrel was artificial. They laughed when asked if the price of oil would ever go down. What a silly question; which part of India and China don't you understand? Naturally, it turned out to be as many of us predicted. The $140 price was the oil companies' scooping up the sliverware and china before Cheney left the Oval Office, and we're back to a sane price just in time for the election - and to keep grannies from freezing to death this winter. Yet people keep watching TV news and believing what they hear. Crazy.

[alvdh1]

The analyst has to amke the assumption that OPEC will not curtail production in order for oil to reach $50 per barrel of oil. Russian oil production has peaked along with Mexico, U.K., Norway and Indonesia. North Slope production has be declining since the mid 90's. When the price falls, people will drive more. $70 - $80 oil is the bottom of near term trading range.

King Abdula has undertaken a massive $460 billion construction boom in Saudi Arabia. He is not going to fund construction with $50 oil. Furthermore, we should set a floor on oil $90 - $100. Any difference below this price should be used to fund alternative energy, energy efficiency and electric cars that directly replace oil. If we allow oil to get cheap again, it will compromise the transition away from it.

[darthdarcy]

So nice to know The Bilderberg Group is here...and everywhere else, making sure the misery factor is preserved..

[KillTheMessenger]

Your own misery is home made. Should have listened to Carter 30 years ago.

[Pquilson]

"If we allow oil to get cheap again,...". Who, exactly is "we"? Why are "we" not interested in oil being affordable to most? Because "you" are more interested in electric cars? They will be available. Buy one. That will reduce demand for oil. Does not matter the price then, to you, does it?
Oh, except that you do still have to heat your home. What are your choices then? Natural gas, or electricity created by coal or nuclear. Solar will not work, currently, for more than a percent or two of electricity production.

[darthdarcy]

If Peak Oil and supply and demand ever had anything to do with the earlier prices from $130-140 as we saw this would mean that nearly double the amount of Oil known to exist had just been discovered..!

Of course Professor Greenberger was right all along, the former director of the CFTC..!

Even now as McCain still claims $700 billion per year is going overseas for Oil it has now come down to $500-550 billion already..!

The oil speculators should be investigated and criminally prosecuted no matter where they are...!

[Pquilson]

I completely agree with you on phantom speculators. Those are the ones who trade for profits, never intending to accept delivery.
Some companies use the commodity market to keep their prices stable, airlines, for example.
Prosecute the phantom traders to the fullest exent of the law.

[KillTheMessenger]

Darth, peak oil fully includes the scenario that an economic downturn at the height of the peak shifts the absolute geological peak later and lower (it happened at least once before). Your assumption that price is an inverse function of supply is nonsense. If twice the amount of oil had been made available to the market, oil would be selling roughly at the price of tap water right now.

Greenberger is still a small man with a big ego that can't get enough of seeing itself on tv.

Shipping $500 billion overseas in a time when you can't even get new loans totaling $500 billion is a catastrophe. How comes you don't get that?

Speculators... yadayada... prosecuted... yadayadayada...

[KillTheMessenger]

That would be cool. Then all the people who put their money into oil shale will learn a lesson for life. And what a painful lesson that would be.

And nobody is even going to move the drill out of the shed for $50/barrel. There is basically no more new oil at a marginal cost of $50 to be had. So that will inevitably ring peak oil in.

But, honestly, I don't think so. If oil were to go that low and demand would go down that much, KSA would simply cut their production. They have very good reasons to lighten the load on their oil fields. The less they pump, the longer the party will last. We just have to see where they will put the lower end.

[Tom95134]

$50 oil? Never happen again. The big oil producing countries will simply close the taps to keep the price hig. They have to maintain a minimum of $60bbl to balance their budgets.

[LibRS]

high fuel hurts my business more than most. however, i dont want it to get so cheap that we all forget about how bad we need to get off foreign petro. we simply must keep pusing to get off the tit of global thugs.

[KillTheMessenger]

Just pass it on to your customers. No big deal.

[Woofer58]

Don't expect pump prices to drop any time soon. This sudden drop in barrel price is a huge windfall for the US oil companies who will now take profits unlike any ever seen in history.
Of course they will say that they need the money for research into non-oil energy. Sure. Watch how big the next dividend is and how much the CEO and top brass make in bonuses..
I bet they stash the money offshore... US banks are too volatile. Cayman Islands banks are doing peachy.
It's all a scam.
The pathetic part is that so many folks really must buy gasoline. What a racket. The mafia are a bunch of amateurs compared to oil companies.

[MajorKong]

That's good in and of itself, but what's driving it down is scaring me.

[ricitizen]

As the financial trader Jim "M a d Money" Cramer said, Obama has smarter people who know about the economy around him. Quote: "If Obama wins we have a recession, if McCain wins we have a DEPRESSION!"

http://nymag.com/news/businessfinance/bottomline/51007/

[rkimball]

this is really great news. now people that lost their homes & now living in their cars can actually afford to idle the engin so they don't freeze this winter.

[ccpostman]

When is the price coming down at the pump?

It should be below 3 dollars a gallon now! All greed.

Does this EVERY year. Prices go WAY up in April-May and come back down a little before Thanksgiving/Christmas retail spending time.

I hope it stays down once Bush leaves office. Lets see if the oil companies have the guts to play this game with Obama?

[rkimball]

gas prices should be arounf $1.60 a gal at today's world oil prices of $78 a barrel.
the prices at the pump will hover between $2.50-3.00. all states will soon burn california standard super refined clean gas adding to the overall costs. also federal & state taxes on gas is going up to pay for deteriorating infrastructures & to bail out the automakers,interstate truckers & the airlines.

this is something the presidential candidates do not want to talk about at all costs.

[KillTheMessenger]

Low gas prices got us into this mess to begin with. Reality basically performed a "bait and switch" on people who would not listen to those who knew that the era of cheap oil was coming to an end. If we had had high gas prices all along (because of taxation), people would have been driving more efficient vehicles and the run up in prices would not have led to such an enormous export of US dollars.

It's a master lesson on short term thinking being beaten by long term reality.

Having said that, the average Prius drive is fine.

:-)

[dolphy]

50 dollar oil....yes.....before the election. after the election, back to normal.

[UnknownSoldier]

this must be those same analyst that said oil was headed for 200 dollars a few months ago

[Egalitare]

Good times, good times.

Looks like the "transaction class" got just a little to clever, eh?

[wordvarc]

We've $1/apple in SoCal.

Our food prices are grossly inflated.