Tuesday, July 29, 2008

OPEC President & Oil price forecast

Where is Crude Oil headed?
$100 or $150?

The OPEC president made comments last month stating that oil prices could go as high as $150 to $175 this summer.

Although OPEC President Chakib Khelil did say this, if you listen to his interview from May at the last OPEC conference, his reasoning was based on a falling us dollar, money moving out of stocks into commodities because of a recession in the US, and the FED lowering interest rates.

Fast Forward to today, the OPEC president made comments that oil prices are still abnormally high, and OPEC member nations should not cut supply if they continue to fall as the oil market is now in balance. Algeria's oil minister, also said that oil prices could fall to $80 or just below in the long-term if the U.S. dollar continued to rise and geopolitical anxieties eased.

As you can see from this chart, the Euro has been declining (US dollar rising), which may be a reason for the recent decline in crude oil prices.

Not only is Crude Oil pulling back, but all of the commodities that were the superstars during the first quarter of the year have pulled back substantially.

It's interesting to note that the Oil Bull; T. Boone Pickens, has a Wind Energy Plan to help solve our Crude Oil consumption problem. Basically he says the US consumes 25% of the world oil and we well save 300 billion annually (import costs) if we build wind farms in the middle of the country. Although Pickens says that Crude Oil is a problem, last report was that he was still long Crude Oil.(Who knows what his definition of Long is?)


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