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231 comments on DrumBeat: December 30, 2008

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Iconoclast421 on December 30, 2008 - 11:01am Permalink | Subthread | Parent | Comments top

It's not just a 4% reduction in demand. The decline in oil prices represents an "unknown" future decline in demand in addition to the 4%.

6 months ago, it was assumed the demand would be higher in 2009. Now we know it is not going to be as high. No matter what happens, that is a certainty. Much industrial capacity is already scheduled to be taken offline, so we know for sure that we wont need as much oil. The degree of certainty that there will be oversupply is what drives the price down.

Go back in time 10 years and look at oil supply and demand. It was a similar situation, except now the potential demand destruction is greater. $5 a barrel isnt out of the question. That probably wont happen until after the next round of destructive "economic stimulus", Obama style. (Note it was the last stimulus that drove oil to $147.)

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paal myrtvedt on December 30, 2008 - 2:54pm Permalink | Subthread | Parent | Comments top

excuse me, but where do you get such ideas from .... 5 dollars / barrel ? It's less than a Big Mac in my country slightly more than a bottle of water ..... Man,

Many producers would close the spigots looooong befor that scenario could theoretically happen.

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elwoodelmore on December 30, 2008 - 5:35pm Permalink | Subthread | Parent | Comments top

"No matter what happens,..."

unless demand is higher.

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231 comments on DrumBeat: December 30, 2008

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