Wednesday December 03, 2008

NYMEX crude oil falls more than $100 from Jul 2008 record on US recession, OPEC production cut delay

bloomberg.com :

Crude oil tumbled, capping a decline of more than $100 from the July 2008 record, on speculation the US may be in the longest slump since World War 2. Oil prices have tumbled 68% in New York since reaching an all-time high of $147.27 a barrel on 11 Jul 2008. Fuel demand dropped as the US, European and Japanese economies slowed. The US first entered a recession in Dec 2007, NBER economists said. Crude oil for Jan 2008 delivery dropped as low as $46.82 intra-day on NYMEX. Prices are also lower because OPEC delayed a decision on a second production cut. OPEC will reduce crude production when it meets in Algeria later this month [Dec 2008]. Oil prices will extend declines during the next 12 to 18 months if OPEC fails to implement "sufficient cuts" and supply stays at current levels, according to BP chief economist Christof Ruehl.

- I've been waiting for this headline and here it is. And this headline is valid for as long as NYMEX crude oil prices stay below $47.27 as the record high was $147.27. At this rate crude oil should be free within a month or two but it's more likely that we'll see a trend reversal, though from what level is anyone's guess. I would continue to watch the USDX for any directional clues - it seems to have gone back to hovering around the 86 area. As long as it continues to trade in this consolidation range, oil and gold will probably also be going nowhere in particular. Watch for any changes to that.

See also :

1. NYMEX crude oil drops below $80 as financial market meltdown continues
2. NYMEX crude oil drops below $60 on demand destruction concerns
3. NYMEX crude oil drops below $50 on global economic slowdown
4. Peak Oil : IEA reports global depletion rate could go up to 9.1%, struggle to produce crude oil
5. Global credit crisis slows food and energy shipments, may lead to shortages

(2008-12-03 13:44:11 SGT) [Energy] Permalink

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