Posts Tagged → price of oil
Oil prices at $55 per barrel, OPEC wishes for $80
At close of market on Friday, oil closed at $54.43 per barrel, well below the high of $147 per barrel price suffered through this past summer. As consumers enjoy gas below $2.00 per gallon for the first time in years, the drop in price is nevertheless a fluctuation in demand. US demand for oil dropped 12.8 percent from a year ago, and even demand in China is down.
This roof cleaning action by the market after a price-roof-breaking summer is a welcome relief to most consumers. However, OPEC has been making noises about wishing prices would rise back to a so-called “fair price” of $80 per gallon, although the Saudis say $75 would be more appropriate.
Still, these are the same folks who, when oil was going for $147 per barrel, were claiming $60 per barrel would be a fair market price. Now that we’re back in that vicinity, they want to drive it up again?
Never trust an oil baron.
Oil continues to ease back down
After months of pressure at the pump, the cost of oil continues to ease, thanks to lower demand – especially in the US – despite concerns like the fresh conflict between Russian and European Georgia. prices are down around $115.20 per gallon and seem to still be headed downward in early trading.
While many analysts are mystified by oil’s drop, the truth is that several months of unrelenting price increases had perched oil at an unmaintainable high benchmark, and all this is, really, is a market correction in the price.
Given the actual market dynamics, oil should be somewhere around $70-$80 per barrel; so although it may take a while, it would not be surprising to see oil continue to fall another $35-$45 per barrel before leveling off, though it may take three or four months to get there.
Right in time for the US elections? No, I doubt this is a big oil conspiracy; it’s more like a colon cleanse for an over-inflated market and where prices go after the US election will still depend more on market dynamics than election results.
Of course, an Obama victory would mean that any easing of prices at the pump could be replaced by a higher federal fuel tax – so watch out.
