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Why hasn't pump fall today?

Nicxtreme

By Nicxtreme,
in General Car Discussion

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Ccssgm

Ccssgm

1st Gear

Oil prices to go below US$100, say analysts

 

They say it could happen as early as next month

 

EXPERTS used to think that it was inevitable that oil prices would eventually hit US$200 a barrel.

 

But after prices fell below US$120 ($168) a barrel last week, analysts are doing a U-turn in their forecasts.

 

They now say it's only a matter of time before oil prices go back to double-digit figures.

 

Some, like commodity brokerage firm Karvy Comtrade's research head, MrHarish Galipelli, believe this could happen as soon as next month.

 

The reason: Signs of slowdown hitting most of the economies across the world, easing geo-political tensions, and an increase in oil supplies.

 

Light sweet crude oil for September delivery closed last Tuesday at US$119.17 a barrel on the New York Mercantile Exchange, down from a record high of US$147.27 three weeks ago.

 

BUBBLE TERRITORY

 

Some analysts believe that the pull-back is proof that oil has entered bubble territory on a mix of financial speculation, worries about a military attack on Iran and rapidly increasing Asian demand.

 

'Crude has lost quite a lot in the last few weeks and US$100 a barrel is of course within reach by September with demand falling amid global slowdown,' MrHarish told The Economic Times.

 

Demand for oil is expected to come down as major economies like the US have upped interest rates to contain inflation, he added, saying that a similar situation is occurring in China as well as India.

 

Also, Saudi Arabia, Libya and Iraq have ramped up their production in recent months. reported Forbes.

 

'This fall is a reaction to overshooting over the past couple of months,' said MrDaniel Ahn of Lehman Brothers, which has issued several reports suggesting oil prices were unjustifiably high.

 

'The fundamentals of new supplies suggest prices will be in double digits.'

 

Oil markets analyst George Littell of Groppe, Long & Littell in Houston said that Saudi Arabia's oil pumps are being run 'flat out', hitting its target of 9.7 million barrels a day last month and silencing sceptics who suggested the kingdom was running out of crude.

 

The increased supply also comes in tandem with a steady recovery in oil production from the Gulf of Mexico.

 

Oil rigs in the area are starting to pump again after being ravaged by Hurricane Katrina in 2005.

 

For example, BP's Thunder Horse platform, which was left a listing hulk by the hurricane, started production last month. Experts say it should be pumping 250,000 barrels a day by the end of next year.

 

As more and more rigs like Thunder Horse get repaired, oil firms are slowly but surely returning to their pre-Katrina schedules

 

'We should see one or two of these (new Gulf of Mexico projects) every quarter through 2009,' said Mr Littell.

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Yaloryalor

Yaloryalor

5th Gear

For the past few times liao. Whenever I pumped full tank, the next day; the price will drop. But I am happy also, as long as the price is getting cheaper!

 

Cheers!

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