Hang In There.........

[USAFANG67]

Friday, April 25, 2008 5:56 p.m. EDT
Is $120 oil even real? Not if you ask the Saudis, or even Lehman Bros.

The investment bank’s oil expert said this week that the oil boom is due to bust. Economic growth across the globe will slow just as new refineries kick in, raising supply.

Recession or not, a U.S. slowdown will slacken demand sharply, right as new oil hits the market. "Supply is outpacing demand growth,” said Michael Waldron, Lehman’s oil strategist.

"Inventories have been building since the beginning of the year. We have pretty significant projects starting soon in Saudi Arabia, and large off-shore fields in Nigeria,” he said.

Lehman is now predicting prices at $83 a barrel in 2009 and as low as $70 in 2010.

Although some years off, Brazil too has found as much as 8 billion barrels of light oil and gas offshore. The South American giant’s president says his country might well join OPEC when the Tupi field begins to pump, in 2011.

In addition, Middle Eastern sovereign wealth funds have pushed up the oil price by investing billions of their oil gains, ironically, in commodities index funds.

Now they could be looking to get out, warns Waldron. He figures the money effect has driven anywhere from $20 to $30 into the barrel price.

In addition, a weak dollar is holding oil prices high, according to a series of statements from OPEC leaders over the past week.

If you buy the views of OPEC’s various leaders, that’s at least another $20 of oil price that is not supported by the actual supply and demand situation.

In addition, Europe’s central bank seems bent on containing inflation there. A rate increase in Europe is sure to contain the euro’s rise against the dollar — if serious steps are taken soon.

Couple that with a lower-than-expected rate cut in the U.S. next week, or perhaps no cut, and the oil price drops as the dollar gains ground.

All this is having little immediate impact now, of course. U.S. gas prices at the pump hit $3.58 a gallon just as the summer driving season kicks off.

If nothing changes, analysts now expect gas to rise to as high as $4 a gallon in as little as a month.

© NewsMax 2008. All rights reserved.

[Mainerunr]

1. while I believe the price of oil is artificially high, I'll believe that it will come down when I see it.

2. no guarantee that lower oil will result in a corresponding drop in gas prices (or #2 fuel oil either), basically, whatever gas cost when oil was last $70/bbl is not what it will cost if it ever gets back down to $70/bbl

[Frontier279]

Originally Posted by USAFANG67

If nothing changes, analysts now expect gas to rise to as high as $4 a gallon in as little as a month.

© NewsMax 2008. All rights reserved.

It's already over $4 in SoCal.

[HKYStormFront]

i'm with maine, just because the price of a barrel goes down 40% doesn't mean gas prices will. they will probably go down a little (if the cost of the crude going down really happens) but i don't forsee a $2 gallon anytime soon, if ever again.

when i started driving gas was $.99

[Barcin]

Frontier 279 where in so cal are you??

Second I believe the gas is artificially high, because exxon recorded their highest profits, so I think higher gas prices are exagerrated so much just so we advance in technology such as other sources as energy, and what better way to do that then raise gas prices....

[TxFront]

The only way I will believe this is when I see it