Originally Posted by
DakarM
my thinking is that yes people will probably go into oil for a short term but as we've seen, consumption will drop drastically when the price hits a certain threshold. thus the price will again drop down.
Agreed. We already saw what $140+ / bbl oil did to consumer spending.
With the hurricane season winding down, I hope we don't test that limit again.
it's possible that we will see a yo-yo effect with the price of oil. as price drops OPEC could cut production to boost price, which would get people to put money in oil but then consumption will drop and the price will go back down again, etc, etc. this yo-yo effect is exactly what OPEC does not want to happen so they will be more careful with cutting back of production as they have in the past.
Yep. It's a safe bet that OPEC will meet more often and adjust production more quickly to suit the market.
I know AAA and I think even the DoE is attributing this year's drop in consumption to demand destruction.
As in a permanent reduction. How they came to that conclusion, I don't entirely know. I'm still a bit skeptical.
h:
But globally, you've still got people in India and China taking to the roads by the millions.
With that in mind, I think we're within $10 or so of seeing a bottom for oil futures..