Oil’s stunning retreat: How long can it last?

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NEW YORK: After surging to record levels this summer, oil prices have suffered a dizzying collapse in recent months, echoing the darkening prospects of the global economy.

Within three months, drastic swings drove oil prices from their peak of $147.27 a barrel to less than $65 a barrel. Oil industry analysts at Goldman Sachs, who had raised the possibility that prices could reach $200 this year, now believe that oil could drop to $50 a barrel in the event of a global recession.


While consumers can cheer the drop, producers have been alarmed at the sudden downturn in their fortunes. Fears of a global slowdown have kicked off a down cycle in the oil sector: It is unclear how long it will last and how low prices will go.

As oil gets caught in the wild gyrations of the financial meltdown, three major questions loom over the oil markets for next year.

What will happen to oil consumption in the United States and in China? How will producers respond to lower prices? Can the oil cartel OPEC stop the slide in prices?

IHT