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Oil and Gas will fall dramatically in price, starting 4 hours ago

June 15, 2011

Oil prices are down $4/barrel today

Oil is down $4.00 today.  A settlement below the old lows breaks a huge level of support, and the next stop is $80 or so.

Why did oil get hammered today?  This is an incredible post over at  FT Alphaville.  The oil markets have plenty of supply, and the only thing keeping oil at a high price is the incredible level of speculation we allow in the oil markets.  You’d think for a strategic resource, we’d have a bit more care about making sure the price of oil was low for consumers. But apparently, this is not the case.

But the good news is we are going to see much cheaper oil sometime very soon, perhaps as soon as tomorrow!

Take aways from the post:

  • Saudi Arabia is acting nearly completely independently of OPEC
  • The U.S. considered and is considering opening the Strategic Oil Reserve to cause prices to fall
  • The U.S could be intervening directly in the Brent Crude market with Saudi Arabia

Plus, the only reason the deal fell apart was about the price to be paid for the oil!   I cannot believe they let this incredible opportunity go! Oil could have been at $80 a barrel in a matter of days.  But it does appear that it is going to $80 anyway.

Gas Prices are due for a tumble

If oil falls to $80, then expect gasoline to fall by nearly $.80 per gallon from current levels, which are already $.20 below the highs.  This will restore $120bn of spending power to consumers, or about .8% of GDP.  More on this in a moment.

Oil is very, very heavy today….

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