Oil fell below $70 a barrel today, for the first time since 2006.
Oct. 16 (Bloomberg) — Crude oil futures fell below $70 a barrel after a U.S. government report showed a bigger-than- forecast increase in inventories.
Supplies rose 5.6 million barrels to 308.2 million barrels in the week ended Oct. 10, the Energy Department said today in a weekly report. Inventories were forecast to rise 2.6 million barrels, according to the median of analyst estimates in a Bloomberg News survey.
Crude oil for November delivery fell $4.50, or 6 percent, to $70.04 a barrel at 11:14 a.m. on the New York Mercantile Exchange. Oil fell as low as $69.15 a barrel after release of the supply report.
But of course, this isn’t good news for OPEC, which is gathering to see if the oil ticks can suck any more blood out of our economic corpus.
The “ideal” price for crude oil is between $70 and $90 a barrel, Organization of Petroleum Exporting Countries President Chakib Khelil said today. OPEC hasn’t decided the size of an output cut it may opt for at a meeting in Vienna on Oct. 24, Khelil told reporters at the Hassi Rmel gas fields.
The best news is that I read somewhere—I can’t find it and can’t remember where it was—that below $70 a barrel is the drop-dead point for Iran. They’re already hurting, but when oil drops this much, it’s going to cause a huge economic crisis. And let’s not forget that Venezuela is also hurting in the current market. Our bad economy means their horrible economy. I think their schadenfreude is going to be cut short, and quickly.
Even if OPEC cuts production, it doesnt’ look like it’s going to stabilize the price of oil.
Credit Suisse Group and Sanford C. Bernstein & Co. slashed their oil-price forecasts for next year as tightening credit conditions and slowing economic growth eroded fuel demand.
Bernstein lowered its crude oil price forecast to $70 a barrel from $90 in 2009 and cut the 2010 estimate to $80 from $95 a barrel, according to a report today. Zurich-based Credit Suisse reduced its next-year estimate by 32 percent to $75.
Sam’s Club in Richmond is charging $2.41 a gallon. We haven’t seen prices that low since September of 2006.
I believe this is where we get to say: In your face, Ahmadinejad.
The free market at work.
Presidential candidates: pay attention!
Congress needs to investigate this plunge in oil prices!
Darn right, Michael.
Heh.
Past history tells us that even if OPEC decides to cut production, its individual members won’t keep their promises to abide by their quotas. Each one wants all the others to do all the cutting, while they themselves continue to pump all they can. Most of them are the kind of folks who would gladly skin their own grandmothers for the hide and tallow if the price was right.
The only problem with a dropping price of oil is that lowering the price discourages investment in alternative sources of energy to imported oil, whether it is solar power, deep sea drilling, shale oil or several other technologies that are, at present, competitive only at high per barrel oil prices. Each of them has a break-even point where it ceases to be economical to pursue the technology with oil at that point or less.