Crude oil in steep slide as lack of demand and oversupply embraces the market in absence of geopolitical gyration
Peter Oberois
Apr. 9, 2007

The crude oil is falling sharply as per the analytic models. I mentioned a few days back that crude will approach $50 a barrel, bounce and little from there and then finally descend down to $30 level over the next two years.

Crude oil for May delivery declined as much as 52 cents, or 0.8 percent, to $63.76 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract traded at $63.80 at 12:14 p.m. in Singapore.

The biggest –problem for crude oil is stealth drop in demand in US, India and China. Although these three economies are growing, stagflation and in some cases early deflation is slowing the economies. In China the economies are cooling after uncontrolled hyperinflation. In US the economy is headed south lead by the auto sector and housing collapse.

In the middle of all this, the crude supplies are at their highest level ever. Crude oil bulls say – in the last twenty years no new reserves were unleashed. Well that is true to some extent; the existing reserves right now are yielding levels never imagined before. Add to that slow improvement of Iraqi oil supplies. Add to those Canadian and Russian augmented supplies. Add to that the cheating and over production by the OPEC members hungry for dollars and euros. You get it – crude will touch $25 a barrel before going towards $100.

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