Thursday, December 04, 2008

$25 for a Barrel of Oil?

That's what Merrill Lynch is projecting:

U.S. stocks fell for the first time in three days, pushed down by concern General Motors Corp. may file for bankruptcy and a plunge in energy shares following Merrill Lynch & Co.’s prediction that oil will hit $25 a barrel.

That is an appealing story, but remember, it was just months ago the experts were telling you to anticipate $200 a barrel oil. I don't necessarily think that $25 is out of the question because I think we've got at least six months of moderate decline before things hit a bottom across the economy, but I don't put too much weight in it, either. Sooner rather than later, OPEC will cut production (or at least claim they will), a crisis will occur in an oil producing nation, and oil prices will bottom out before the economy does.

No comments: