In a sort of magical somersault, the crude price came down to about $72 per barrel, a 13 months low, on Wednesday, the 15th October’08 on world markets amid fear of recession in world economies led by considerable down turn in US economy. Statistically the crude prices has just about halved in mere three months from July’08 when it zoomed to $147 per barrel.
Proving the prophecy of most analyst- that crude would reach $200 barrel before the year end-wrong, the down turn of crude prices continued unabated in recent times and may even go down a bit more. However the general consensus is that the prices would stabilize around $70 for a short term in the wake of resuscitation of economic down turn by countries and central banks by pumping more liquidity into circulation and purchase of stocks of banks and other economic giants whose failure has resulted in the economic shock waves since the great depression of 1930s in the USA.
The crude is thus expected to have reached the floor and is likely to look up from here slowly with improvements in world economies. Otherwise too, any fall below the support- level of $70 would prompt the Organization of Petroleum Exporting Countries (OPEC) to cut oil production. Already OPEC has convened a meeting of its members in Vienna on 18th November’08 and President Chakib Khelil is said to have hinted that the cartel may consider production cuts in view of dramatic price fall.
However, the medium term look out for prices are projected not above $75-$85 dollars per barrel, even if a cut in oil production occurs, because in spite of the governments tending the economy, the cut in gas use by citizens of USA and other developed countries would take its own (healing) time before they resort to gas use to pre-downturn levels.