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A “devastating” glut of crude this autumn will send the oil price plunging to $20 a barrel, a veteran adviser to the US government has warned.
Academic Philip Verleger, who has built up a following for predicting last year's $147 a barrel “superspike” and then the six-month “reverse spike” to $34 last winter, says the recession will force down oil to prices last seen in 2002.
“The economic situation is not getting better and Opec [the Saudi-led oil producing cartel] does not realise the magnitude of the [output] cuts they need to make,” said Verleger.
Verleger is forecasting a surplus of 100 million barrels of oil as production outstrips consumption. Worse, he says, he does not believe the world has the capacity to store the growing surplus. “If the recession continues and its a warm winter it's going to be devastating,” he said.
He is running against the tide. An average of analyst forecasts on news agency Bloomberg indicates the consensus opinion is oil will average $63 a barrel in the last quarter of the year as the received wisdom is China and the other major emerging economies will continue to grow. Brent crude today slipped 38 cents to $63.37.
Reader views (2)
Even with Oil prices 'set to dive to $20 a barrel’ it is doubtful the effect will be anything like as much a drop at the Fuel Pumps.
As the increased price of Oil was the reason given by British Gas to increase their prices by a staggering 40% plus, we should all now see a price reduction in our Gas Bills should we not?
"The British government have quite clearly sat on their hands by failing to cap utility prices. The (so-called) Monopolies Committee proved itself a useful tool for large corporate companies to split up and blame their original supply section for the rise in cost of basic raw materials. How very convenient for British Gas to blame Centrica for rises in supply costs
- Carl Barron, Christchurch, Dorset, 19/07/2009 14:26
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Plastic2Oil process of TRTN should help the price drop.....z
- Hans Brost, Palm Springs, USA, 17/07/2009 21:17
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