Due to larger than anticipated American supplies of gasoline and other oil byproducts, the price of oil per barrel continues to remain low. Although OPEC had indicated earlier in the month that they planned to decrease output, oil continues to cost about $40 per barrel. “Crude oil is set to continue on its downward spiral through the end of the year,” John Kilduff, senior vice president of risk management at MF Global Inc. in New York, says to Bloomberg News. “The build in gasoline supplies last week will put further pressure on the market.”
Gasoline stores are currently in excess of 200 million and are predicted to rise by another 750,000 barrels, according to Bloomberg’s survey-based forecasts. Large stores typically indicate that gasoline prices will remain constant or drop if no other major factors influence the market.
In addition, despite the trend toward an increased demand for home heating oil in the winter months, the price of oil has declined dramatically since its high of nearly $150 per barrel this past July. Prices have dropped over 75 percent since the record of $147.27 was set on July 11, 2008.
“We will probably test $35 and $30 before year’s end, as traders square their books,” Kilduff tells Bloomberg News. “We can expect prices to rebound next year.”
Prices have, in fact, begun to move in an upward direction from recent lows around the $35 mark and are expected to carry through to the new year around $40.
--Bridget O'Sullivan
