Thursday, July 16, 2009

Verleger Predicts $20 Oil This Year on ‘Devastating’ Crude Glut -- bloomberg

July 16 (Bloomberg) -- Crude oil will collapse to $20 a barrel this year as the recession takes a deeper toll on fuel demand, according to academic and former U.S. government adviser Philip Verleger.

A crude surplus of 100 million barrels will accumulate by the end of the year, straining global storage capacity and sending prices to a seven-year low, said Verleger, who correctly predicted in 2007 that prices were set to exceed $100. Supply is outpacing demand by about 1 million barrels a day, he said.

the entire article is worth a read. click here for the rest.

My target for later this year (which I first made in March) is for $29 basis December 2009 NYMEX. $20 seems a little low. near month futures price of $24.65 for WTI sounds more realistic.

the only problem I have is that I am so used to using bloomberg headlines as contrary indicators that this has me a little suspicious. not enough for me to change my outlook, but maybe enough to keep me on my toes.