Oil on Wild Ride; How Will It End?

NEW YORK (AP) — The price of oil is on a wild ride, and there is little agreement on where it's headed.

After falling nearly 60 percent from a peak last June, the price of oil bounced back more than 20 percent as January turned to February. Then, on Tuesday, it sunk 5 percent, closing just above $50. Oil has fallen or risen by 3 percent or more on 14 of 27 trading days so far this year. By comparison, the stock market hasn't had a move that big in more than three years.

Predicting prices is especially tricky now because the oil market has never quite looked like this. Oil price collapses of the past were triggered either by plummeting demand or an increase in supplies. This latest one had both. Production in the U.S. and elsewhere has been rising, while slower economic growth in China and weak economies in Europe and Japan means demand for oil isn't growing as much as expected.

As recent trading shows, any sign of reduced production inspires traders to buy oil, and every new sign of rising supplies sends prices lower. In a report Tuesday the U.S. Energy Department, citing unusual uncertainty, said the price of oil could end up anywhere from $32 to $108 by December.

"There are many more laps to come on this roller coaster," said Judith Dwarkin, chief economist at ITG Investment Research.

As oil bounces up and down, so will the price of gasoline, diesel and other fuels. Almost no one expects a return to the very high prices of the last four years, so drivers and shippers will continue to pay lower prices. It's a question of how much less, and for how long.

Oil Will Rise

Those expecting a quick and lasting price jump see mounting evidence that drillers in the U.S. are pulling back fast because they're no longer making money. A closely-watched survey by the oil services company Baker Hughes shows that the number of rigs actively drilling for oil fell to 1,140 last week, down 29 percent from a record high of 1,609 in October.


View Full Article

Copyright 2015 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Related Companies

Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
Oilfield Sales Representative - Outside Sales (Oil and Gas)
Expertise: Business Development|Project Management|Sales
Location: Odessa, TX
EU Business Development Manager - Refining/Maintenance Services
Expertise: Business Development
Location: Houston, TX
Manager - Financial Reporting
Expertise: Accounting|Financial Analyst
Location: Houston, TX
search for more jobs

Brent Crude Oil : $49.98/BBL 1.59%
Light Crude Oil : $49.18/BBL 1.56%
Natural Gas : $2.73/MMBtu 1.44%
Updated in last 24 hours