The oil price would continue its downslide and would probably reach the level of 25 dollars a barrel, analysts was quoted as saying by local media of Los Angeles on Tuesday.
I don't think the downside is over, Phil Flynn, vice president and senior market analyst for the Chicago-based Alaron Trading Corp, told the Los Angeles Times. There is a lot of surplus oil out there.
Flynn said that 25-dollar-a-barrel oil is not out of the question and that there was no reason why one-dollar gasoline isn't possible.
But Fadel Gheit, senior energy analyst for Oppenheimer and Co., told The Times the price of oil won't stay down.
Some of the same clowns who were predicting 200-dollar-a- barrel oil a few months ago are in the crowd predicting 25 dollars a barrel, Gheit said. But just as we believed that oil above 100 dollars was not sustainable by market fundamentals, oil below 30 dollars isn't sustainable either.
Amid predictions of further decreases, the average price of a gallon of self-serve unleaded gasoline in Los Angeles fell to its lowest level since January 2004 on Tuesday, dropping 1.9 cents to 1.801 dollars.
The average price has fallen for 84 consecutive days, dropping 1.966 dollars over that span, including 1.8 cents from Sunday to Monday.
The average price had been at its lowest level since February 2004 before Tuesday's decline.
The lower prices reflect a steady decline in crude oil prices caused by lower demand associated with the worldwide economic downturn, less use of gasoline -- partially the result of conservation by drivers -- and reduced speculation by futures traders, said Jeffrey Spring, public relations manager of the Automobile Club of Southern California.
The price of a barrel of light sweet crude fell 74 cents to 42. 97 dollars in early trading Tuesday on the New York Mercantile Exchange, 71 percent less than the record high of 147.27 dollars set on July 11.
Analysts attributed Tuesday's decrease to doubt among investors that an expected major cut in production by the Organization of Petroleum Exporting Countries (OPEC) would end the price decreases.
Source: CRIEnglish