Leslie Turk

$40 oil by next spring?

by Leslie Turk

Say it isn't so.

Low oil prices translate into savings for consumers at the pump, but the farther they fall, the more likely Lafayette's economy will join the rest of the nation's economic woes.

An analyst at Deutsche Bank said yesterday that oil prices could fall as low as $40 a barrel next spring as several new, efficient refineries come on line. And some analysts now say they could go even lower. The New York Times reported today:

Calling it the "mega-bear" case for oil, analyst Paul Sankey said the combination of weak demand for gasoline and other products, coupled with the start-up of 2 million barrels a day of processing capacity at a new generation of refineries in India and China and expansion projects in the U.S. will combine to depress oil prices.

Sankey's stance, while pessimistic, still anticipates slightly higher oil prices than the bank's commodities analysts, who on Friday said that oil futures prices could fall further to $30 a barrel under their worst-case scenario. Deutsche Bank's stance stands in sharp contrast to Wall Street's oil price expectations just months ago. Analysts were repeatedly forced to upgrade their predictions this year when prices for crude oil futures on the New York Mercantile Exchange surged to record highs north of $145 a barrel.

Read the story here.