Oil May Fall to $50 in Global Recession, Merrill Says

[Tandalayo_Scheisskopf]

Source: Bloomberg

By Angela Macdonald-Smith

Oct. 2 (Bloomberg) -- Crude-oil prices may fall as low as $50 a barrel next year, about half current levels, in the ``unlikely'' event of a global recession, weighing on shares of petroleum producers, Merrill Lynch & Co. said.

Such a scenario, where global growth in Gross Domestic Product falls to 1.5 percent, isn't the base-case forecast, the bank said today in a report. Merrill cut its 2009 average price estimate for West Texas Intermediate, the U.S. benchmark oil grade, by 16 percent to $90, citing falling demand and the start of new fields in Organization of Petroleum Exporting Countries.

Crude-oil future prices have fallen almost a third in New York since reaching a record $147.27 a barrel on July 11, driven by concerns a worsening financial crisis in the U.S. is crimping energy demand. U.S. oil use is declining faster than expected, while European consumption is falling ``rapidly,'' and OPEC production capacity is ``just about to soar,'' Merrill said.

``Combined, these factors represent significant short-term headwinds for both upstream and downstream companies alike,'' Merrill analysts Mark Hume and Alexis Clark said in the report. ``Notionally it is conceivable that in a worst-case scenario global oil demand actually contracts in the near-term as it did back in the 1980s post the Iranian Revolution.''

Read more: http://www.bloomberg.com/apps/news?pid=20601072&sid=aPQbL6d0xPU8&refer=energy

[Faygo Kid]

1. If it drops that far, the oil companies may cut their prices 25, maybe even 30 cents a gallon.

[kestrel91316]

2. Yep. It may eventually drop to just under $3.25. WOW.

[NeoConsSuck]

10. And heating oil will drop 2 cents during the winter months

until the month of March, when it will drop significantly.

[ozone_man]

3. I think that is very likely.

It's funny that they mention the $50 price level as a possibility, but in the same sentence say that it's unlikely that there will be a global recession. I think it's very likely for both. Some may say we're already there.

[livelongandprosper]

4. So be it. We shouldn't produce and consume so much in the first place n/t

[Umbriage]

5. If gas prices fall, bring the recession!

Just kidding. Can anyone explain why as the economy deteriorates gas prices tank? I'm at a loss for an explanation.

[lutefisk]

9. supply and demand?...n/t

[yellerpup]

6. And in the meantime, BUSHCO has been buying the high priced spread

and stockpiling it in our strategic reserve, so when cheap oil does flood the market again we won't be able to buy in.

[Art_from_Ark]

7. So Merrill Lynch, one of the companies responsible for the current mess

predicts that oil may fall to $50/barrel.

Y'OK.

http://www.risknews.net/public/showPage.html?page=429507

[liberal N proud]

8. Gas prices will remain above $3.00/gal

Although I did pay $3.21 on Wednesday

[gasperc]

11. Wow, that will really crush Alaska

poor Palin and her bloated oil revenue budget is going to coming crawling and begging for help from the federal government. Hopefully, she gets CRUSHED in her reelection bid.

[CRK7376]

12. But gas pump prices

here in NC will remain at $4.00+ per gallon....greed, greed, greed....

[ohio2007]

15. because the upcomming gas tax gets passed on to consumers to pay off that $700 billion bailout

thanks Sam I am

[hughee99]

13. I knew * had a plan to fix oil prices!

Reporter: "Mr. President, what do you intend to do about skyrocketing oil prices"
Idiot: "I got two words fer ya, Global Raseshion"

[robertpaulsen]

14. Merrill Lynch? I should trust their bankrupt predictions?

I think this guy has a better track record:

http://money.cnn.com/2008/10/01/news/economy/rainwater_okeefe.fortune/index.htm

[Doctor_J]

16. fall to $50? Wasn't it $22 when Smirk took office?

:eyes: