Oil may hit $70 as weaker economy lowers demand

An economic slowdown in the United States that could turn into an outright recession later this year is likely to weaken demand for oil in the months ahead, which could push the price of a barrel of crude as low as $70 by June, analysts said.

But a host of factors ranging from the onset of driving season, uncertainty about the depth of the economic slowdown, and resistance to output increases from producing nations could all conspire to make any decline in prices short-lived and limit its impact on the consumer, they said.

Crude topped $100 a barrel for the first time early this year, after surging nearly 60% in 2007, propelled mostly by rising demand and tight supplies. A sliding dollar and increasing bets by speculators also contributed to the huge run-up.
But the price of oil has since been weak and is now $10 a barrel below its historic high. Worries have mounted that a weaker U.S. economy may trigger a global slowdown and push oil demand even lower.

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