MattB

How Low Can Crude Oil and Gas Go?

Oil prices below $50-60 spell disaster for many of the primary producing countries' economies - notably Middle East, Russia and Venezuela. Geopolitics says the price cannot stay below that level for long without increasingly desperate measures to underpin the price. I agree that the spot price is driven more by perceptions and speculation than fundamentals - $30 makes no more sense than $150 did (although I think the latter is a truer reflection of the supply/demand balance once the global economic correction settles down). Looking beyond the violently swinging price pendulum, I think a realistic price target for 2009 - assuming there are no more major nasty suprises in the economic closet - is in the $65-80 range.