$100 oil fades fast

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The prospect of $100 a barrel oil is evaporating as fast as it was conjured.

The commodity, which nine days ago was less than a dollar away from $100, is on Friday at less than $90, tumbling on the reality that oil supplies are adequate and that Saudi Arabia will likely fight for an OPEC production increase at a meeting next week to push the price lower so sagging demand for the product might rebound.


“Last week, we had suggested that the party for crude oil may be slowly drawing to a close,” analyst Marty King of FirstEnergy Capital in Calgary said in a report on Thursday. “Given the downward pricing pressure seen this week, it would seem that the guests continue to file out the door and the lights are being dimmed. Indeed, the lights may grow dimmer in the next few weeks.”

If you’ve got money in oil, Mr. King’s immediate advice is clear: “Profit take, for now.” On the “for now” bit, Mr. King means he sees oil remaining fairly high over 2008, predicting an average of $72 a barrel, which is higher than many forecasters, but he feels he might be lowballing it, talking about “real additional upside.”

Globe and Mail