Zachary Scheidt

Oil to Retest $40/Barrel by Year-End?

The recent weakness is likely due primarily to regulatory rhetoric as the CFTC threatens to curb speculation. While oil could certainly continue to drop as a function of weaker demand in a stubborn global recession, it will not likely reach the fear levels seen this spring. One of the main reasons is because we don't have nearly the amount of long exposure trapped in the markets. In mid to late 2008, nearly everyone who dabbled in the market had exposure to oil or some other energy investment. As the bubble burst, it caused excessive selling which the market could not absorb. I don't think there is the selling pressure today to drive the prices to that extreme low.

Zach
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