NYMEX crude oil rebounds off $87.56 low as governments respond to credit crisis

NYMEX crude oil for Nov 2008 delivery rebounded above $88 on Tuesday [7 Oct 2008] after falling as low as $87.56, dropping below $90 for the first time since Feb 2008. Oil prices have tumbled from a high of $147.27 in July due to a rising US dollar, and slowing demand in the US and other industrialized countries from high fuel prices and the financial crisis. China will skip gasoline imports in October for a second month due to heavy domestic stockpiles and a dip in demand.

Governments around the world scrambled for new measures to contain the fast-spreading credit crisis amid a cross-asset sell-off in stocks, bonds and commodity markets. Sweden, Austria and Denmark followed Germany's lead by offering blanket deposit guarantees to depositors. Iceland gave regulators sweeping powers as its currency fell 30%. In the US, more steps to shore up banks and ease pressure on the credit markets could be coming following the $700 billion bailout bill.

- Regular peakoil.com readers are probably watching the record-setting thread, now (temporarily) re-purposed as the "how low can it go" thread. So $147.27 has been the local maximum and the crude oil bulls seemed to have been banished and in fact many have turned bearish.

The calls out in the media are for $80 oil, $70, $50 oil, and a couple of them even had the audacity to suggest $30 and $20 oil, boldly proclaiming some kind of "hyperdeflationary scenario", if there is such a term. But really, "hyperdelusionary" might be more like it. People are acting like the global economy has already collapsed, and the money supply growth has gone negative. But if anything else, money supply is going up, not down, as governments embark on rate cutting, liquidity injections, and further intervention.

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