When oil abounds, prices fall
Plug the low price of diesel and gasoline into the supply-and-demand formula, and it tells you supplies are plentiful. True enough, and they’re getting more plentiful by the day.
U.S. commercial crude oil inventories jumped 6.2 million barrels from the previous week, almost twice what was expected, according to Wednesday’s report from the U.S. Energy Department. That’s thanks to the anemic world economy, which is requiring less energy.
At this week’s NATSO Show 2009 in Nashville, truck stop operators heard the same thing, along with a brash prediction, reports my colleague Randy Grider, Truckers News editor, who was there. Wachovia Managing Director and Senior Economist Mark Vitner said the price of a barrel of oil is likely to dip into “single digits,” due to the economy and oil futures contracts that last year bet on sky-high prices.
Pretty amazing to consider that a commodity trading around $140 last year – when speculators were talking about a $200 target – could this year drop below $10.