As experts watch the economy start to show signs of life – they’re also watching the price of oil. We’re tracking perspectives around the world on what to expect from the price of oil over the next few months…
When tracking the price of oil the first thing to understand is it all depends on your source…
Let’s begin with CNN
. Correspondent Christine Romans tries to explain the recent spike in oil prices.“Because of the bailouts and now all of the concern in global markets about how much money the United States is borrowing and spending, it’s weakening the dollar. As the dollar weakens, people are concerned about inflation, and the hedge against inflation is commodities. So you’re seeing money flowing into crude oil, because of concerns about the dollar and the future of this country.”
We find another perspective from writer Tim Williams. He works to simplify the oil industry’s volatile nature for contributor-driven magazine The American Chronicle
.“The Oil Industry is continuing to horde vast amounts of oil reserves much like the Diamond industry to purposely keep the price people have to pay unstable and now approaching unaffordable. The Oil industry continues to find any excuse to justify their fluctuating rate hikes”
takes a macro view and wonders whether several years of producing under capacity will come back to haunt the global economy.“With oil demand expected to rebound next year, following two consecutive years' decline, failure for oil production to keep up with a rising demand could drive up oil prices and put a nascent global economic recovery on screeching halt.”
The LA Times
backs up that prediction…“…this much seems clear: The move from $33 to $68 a barrel -- during a time of surplus -- offers just a whiff of what will happen when supply tightens up again. If the recession passes and scarcity sets in, the return of energy angst, here and around the globe, will make for giddy prices in the oil market.”
We finish up looking at three of the world’s top financial forecasters who have vastly different guesses as to oil’s year-end price.
Their wide-ranging guesses testify to the unpredictability of the market.
Banking firm Goldman Sachs see’s prices as high as US$85. Economist Carl Futia
guesses $75 while JP Morgan goes lower, predicting $65.
By the way, oil prices one year ago were $138, today they’re less than $70.