Crude Oil Trades near $39 on Grim Economic Outlook
Posted on 31. Dec, 2008 by admin in Crude Oil, Forex News
Oil prices fell $1.00 on Tuesday as fear about demand in the global economy outweighed expectations of further Saudi supply cuts in February and tension in the Middle East due to the Israeli-Hamas conflict. The market took in data showing a sharp fall in weekly U.S. retail gasoline demand, and record low consumer confidence in the world’s largest energy user in December. Oil rose more than 6% in each of the two trading days to December 29 on concern that supplies from the Middle East may be disrupted due to the extended conflict between Israel and Hamas in Gaza.
For the next year, the prognosis is that Crude Oil may rebound to average $60 a barrel as the Organization of Petroleum Exporting Countries (OPEC) makes record production cuts to counter the deepest economic slump since World War II. That would be a 53% gain from today’s price of $39 a barrel. The group already has cut output three times in an effort to remove about 5% of world supply. OPEC oil supply is expected to fall by 400,000 barrels per day (bpd) in December as members boost compliance with their deal to reduce output and support Crude Oil prices.
