Remember when oil prices peaked in July 2008 at $148 a barrel?

News reports were full of comments that said black gold had a lot more upside. That didn’t surprise us: investors have always extrapolated the current trend into the future.

Of course, just as “peak oil” voices were the loudest, the market turned. By December 2008, a barrel of oil cost just $32. It was a near-vertical drop for six months.

Oil bulls suffered, though motorists saved money: oil and gas prices do trend together.

After hitting a low, oil prices rebounded. Gas prices soared to over $4 a gallon in some parts of the country.

Soon enough, the “voices of extrapolation” grew loud again:

Energy experts say gas could hit $8 if Iran closes strait

(USA Today) March 23, 2012

T. Boone Pickens: Oil Could Hit $148 Per Barrel

(CNBC.com) April 3, 2012

Those are just two examples.

In stark contrast, the April Elliott Wave Theorist said

The rush to extrapolate is all we need to conclude that the odds of oil and gasoline prices going to the moon are extremely low. Yet we also have Elliott wave analysis.

And that analysis strongly suggested that oil was headed down. Sure enough, oil reached a new low today (June 1) and has closed lower for 21 out of the past 22 sessions. It lost 8 percent this week alone. Gas is down 50 cents a gallon in less than 2 months. That’s about a 15 percent tumble.

Where do we see oil prices headed from here?

5 Comments on "A Slippery Slope for Oil: How Hard Will Prices Fall?"

BillT on Sun, 3rd Jun 2012 1:39 am 



It can only fall a bit more before the production drops to force it back up. Cheap oil is NOT in the cards. Besides, war in the Middle East is also in the cards which will change everything in a negative direction.

Harquebus on Sun, 3rd Jun 2012 3:47 am 



Increased extraction costs combined with declining demand due to decaying economies. Great.

Arthur on Sun, 3rd Jun 2012 10:16 am 



Oil could very well drop to 30$ again like it did after 2008 if the economy or financial system collapses. High oil prices are garanteed only in a situation of a global booming economy and a booming economy is not in the cards. The situation is too complex to model in the short term, as even ‘arch-modeller’ Dennis Meadows admits. In the long term, obviously the carbon based economy is dead.

Plantagenet on Sun, 3rd Jun 2012 6:13 pm 



With the US, EU, and China all simultaneously undergoing economic contractions, the price of oil may continue to fall for quite a while longer.

Newfie on Sun, 3rd Jun 2012 11:48 pm 



The Peak Oil Boom Bust Cycle. We’re in it. (see Plan B Economics)