Oil Sells For $40, May Dip To $25 January

By Adeola Yusuf, Reporter, Lagos

Organisation of Petroleum Exporting Countries (OPEC) members, including Nigeria, plan further cuts in output if doing so would stabilise the market.
Oil prices traded around $40 per barrel (pb) on Tuesday, after dropping sharply overnight on concerns that United States energy demand from Nigeria and others "is evaporating in the face of a severe global economic slowdown."
Last week, OPEC members slashed production by 2.2 million barrels per day (bpd), the largest ever, adding to a 1.5 million reduction in November to stem rapid price decline.
OPEC President, Chakib Khelil, who announced the new position on Tuesday, added that production would be slashed as much as necessary to stabilise prices.
He said the market needs time to absorb previous cuts. Analysts predicted that oil price could dip to $25 in January 2009.
"It will take time for output cuts to flow through, but there's some doubt about whether there will be full compliance," analyst Toby Hassall said.
"I wouldn't be surprised if OPEC cut again in January or February. There's been quite a significant demand side deterioration."
Oil's downward curve is also dragging down gasoline prices and giving consumers a break at the pump just five months after gas prices peaked at $4.11 a gallon.
Noting that retail gasoline prices have fallen for the 23rd consecutive week since July 4, trader and analyst Stephen Schork said as of Monday the national U.S. average was $1.653 a gallon.
"That is the lowest price at the pump in nearly five years, that is, since February 2004," he noted.
Prices have fallen 73 per cent since July on investor fears that massive job layoffs and plummeting consumer spending in the U.S. are weakening global oil consumption.
After being just under $40 for much of Tuesday, light sweet crude for February delivery was 52 cents higher at $40.43 pb in electronic trading on the New York Mercantile Exchange by afternoon in Europe.
"Fears of demand are dragging the price lower," said Hassall. "You don't want to get in the way of a runaway train."
Overnight, the February contract fell $2.45 to settle at $39.91 pb after Toyota and drugstore operator Walgreen Co. reported dismal news.
Walgreen said profit fell 10 per cent in its fiscal first quarter, Toyota slashed its earnings forecast for a second time, warning that it now expects to post an operating loss for the fiscal year through March for the first time in 70 years.
The Dow Jones industrial average fell 0.7 per cent on Monday, the index's fourth straight day of losses. Oil investors look to stock markets as a barometer of sentiment in the economy.
"What we may have to see before oil prices really carve out a bottom is evidence that crude inventories have stopped rising or a sustained rally in equities," Hassall said. "The focus of the market has been almost purely on the demand side."
Hassall predicted prices could fall as low as $25 a barrel next year before rising to as high as $60 if the global economy recovers in the second half.
"Prices could dip into the 20s for a time, and then there will likely be fairly choppy, sideways action in the first quarter."
Gasoline futures on the Nymex gained over a penny to fetch 90 cents a gallon. Heating oil was up a tad at $1.35 a gallon; natural gas for January delivery rose by more than 12 cents to $5.41 per 1,000 cubic feet.
In London, February Brent crude gained 55 cents to $42 a barrel on the ICE Futures Exchange.


http://www.independentngonline.com/news/tfpg/article02

Otuocha!

so happy just some weeks back i was paying high to fill my tank. now i get a filled tank for half pwew one can drive and play around now.

*Hauwa*:

so happy just some weeks back i was paying high to fill my tank. now i get a filled tank for half pwew one can drive and play around now.

small girl,obviously u hav no idea wat this will do to ur father land.

small girl,obviously u hav no idea what this will do to ur father land.

She has no idea we are on fire.

what did she benefit when you guys were swimming in oil money?

what did she benefit when you guys were swimming in oil money?

Good roads, food and electricity.

Is that why Fashola went to holy Ghost conference to ask God to cease the fall?

Aloy.Emeka:

Good roads, food and electricity.

Is that why Fashola went to holy Ghost conference to ask God to cease the fall?

you are talking to the wrong person. what is Holy Ghost conference? never heard of it until some days ago. what are you talking about and who is the fashola self?

OMG

N25, now I need to start fasting and praying.

I pray if falls to $25 dollars or even lower, That will get us thinking, It could make bunkering less attractive,

No free money from anywhere, If we are serious with agriculture/services/manufacturing etc we could make about half of what me make from oil,

Besides, the level of positive change ( If much) is not comparable to the level of income from oil in the past 5-6 years.
I pray it drops to less than $10

musa

you mean what will happen to your thieving uncles and abokis? dan Allah, kari ka fara

Dear all
I have said it time and time again, "THE AMERICAN ECONOMY WILL DEFINETLY COLLAPSE", the drastic fall in the price of oil is just the beginning. I know some people may think i am a doomsday student or nut case, but that is not the case. Anyway the good news is that the fall in the price of oil would only be detrimental to the Nigerian economy for a short while after which Nigeria would recover. As for America the end is drawing near for them, for those nairalanders based in the U.S take note of this post and dont take it likely.

I think Opec must have a new standard of trading. Gold is ideal, it is very stable not dollars.

@ Frizy
that was a nice post, our attention should gradually shift away from dollars into something else.

pcmecom:

Dear all
I have said it time and time again, "THE AMERICAN ECONOMY WILL DEFINETLY COLLAPSE", the drastic fall in the price of oil is just the beginning. I know some people may think i am a doomsday student or nut case, but that is not the case. Anyway the good news is that the fall in the price of oil would only be detrimental to the Nigerian economy for a short while after which Nigeria would recover. As for America the end is drawing near for them, for those nairalanders based in the US take note of this post and don't take it likely.

Lol, you need to step away from that haterade cooler. Seems you mad at the U.S or something. The price of oil will have a postive effect on the american economy compared to the Nigerian one. you said it's going to be dentrimental to the nigerian economy for a short while? Newsflash: The budget benchmark is based on $45 oil, if it falls then what's going to happen. When oil was $147, there was no positive effect on your economy, what do you think will happen if its $25?

Yeah, I'm taking note but also taking it lightly.

i cant imagine wat will happen next year,
may God help us (the masses)

@martian
Dont get me wrong, I love the United states of America but I just dont like its policies and how its negatively affects developing countries including Nigeria. As per the collapse of the American economy:we shall see!!!

pcmecom:

@martian
don't get me wrong, I love the United states of America but I just don't like its policies and how its negatively affects developing countries including Nigeria. As per the collapse of the American economy:we shall see!!!

Fair enough. What policies are you unhappy with?

here it comes. . . . wait for it!!

personally i wish oil drops as low as $2 so that nigeria comes with better avenues for sourcing revenue.

pcmecom:

Dear all
I have said it time and time again, "THE AMERICAN ECONOMY WILL DEFINETLY COLLAPSE", the drastic fall in the price of oil is just the beginning. I know some people may think i am a doomsday student or nut case, but that is not the case. Anyway the good news is that the fall in the price of oil would only be detrimental to the Nigerian economy for a short while after which Nigeria would recover. As for America the end is drawing near for them, for those nairalanders based in the US take note of this post and don't take it likely.

My guy, stop bickering jare.
Do you even know what you're talking about. The downward prices in oil will/already have a positive effect on the american economy. The U.S is the largest consumer of imported oil in the world and you think lower prices indicates a problem. If you had said the "dollar" might see some unwarranted problems, then i'd understand.
With regards, to the U.S economy. My reply to that is "THUNDER FIRE ANYONE THAT PRAYS FOR THE DOWNFALL OF THE U.S ECONOMY"
Bunch of ingrates. Do you think it is only americans that benefit from the american economy?
Do you know how much money has been flown into Nigeria this xmas from the U.S alone.
God bless America. May the economy continue to prosper. "AT least till i retire"
Your prophecy is just beef.
All world powers' eventually collapse. We know that. We saw what happened to the Romans. It's a question of time so don't think you're a genius.
By the special grace of God, the U.S economy will not collapse in our generation. Did i hear you say AMEN?

Cost of Oil is down to about 40 bucks. Cost of goods: Food, transportation (gas prices) and necessities are going down as well and someone believes the US Economy is going to be the hardest hit by this? Sigh!!

Martian:

Fair enough. What policies are you unhappy with?

Still waiting for the answers to the billion dollar question . . .

the sooner it ges to $5 betterstill $2 a barrel the better. now the question for gbenga daniel and the rest of the bofoons is how will he govern ogun state without any allocations from the fed. then we will be able to separate the boys from men. because if it is tru taxation then maybe the average nigerian will wave next time the siren echoes tru ibara or okelewo or may be he will be stoned. so goes for the rest of the thieves.

Kobojunkie:

Cost of Oil is down to about 40 bucks. Cost of goods: Food, transportation (gas prices) and necessities are going down as well and someone believes the US Economy is going to be the hardest hit by this? Sigh!!


Still waiting for the answers to the billion dollar question . . .

He probably doesn't understand, when we sneeze the whole world catches the flu. We caught a cold and everybody on I.Vs!!!!!

I think what these minds fail to grasp here is the fact that the US is merely a customer when it comes to oil and it is in the US, and the world’s best interest that it remain low at least some reasonable price where everyone gets to benefit some.

We just saw what happened world wide with the hike in price. Even though many countries made lots from the boom, the gap between the rich and poor increased drastically. The cost of food and other commodities went up and people in places like Nigeria suffered it. Why in the world would an oil producing country like Nigeria need to spend billions to subsidize the cost of gas for its own people? Isn’t that senseless in and of itself?

Now that the cost is down, the manufacturing industry in America and countries around the world are better able to compete with China. This was reported some weeks ago as reason why the Chinese government continues to favor a weak yen, so it can remain at the top and continue to bring more business in China.

The dollar goes even further these days than it did only a couple of weeks ago. You send the same $100 back, that you sent back in January of this year, to someone in Nigeria now and see how the value has yet to change for good from what it was earlier this year. But the same $100 can fill your grocery cart and more here in the US. Please let us open our eyes to the reality of things because this is the only way you can solve the problems we continue to face to date.

We don dey enter 2009, soon 2010 go come, wetin don change?

noffing don change my bro. absolutely nothing.

Muza:

i can't imagine what will happen next year,
may God help us (the masses)

stop being a hypocrite. Does the north consider itself part of the "masses"? Why do you rely 150% on the price of oil drilled so far away from you?
What are you deluded morons doing to revive your own economy and be less dependent on oil?

I'd be happy if prices crash to $2 a barrel. Lets see whether you people wont eat.

@davidylan
I agree with u totaly.I wish Obama when he comes in will make the US less dependent on oil.In fact i want the price drop below $2 so that nigeria would find other means for the revenue.

davidylan:

stop being a hypocrite. Does the north consider itself part of the "masses"? Why do you rely 150% on the price of oil drilled so far away from you?
What are you deluded morons doing to revive your own economy and be less dependent on oil?

I'd be happy if prices crash to $2 a barrel. Lets see whether you people wont eat.

militant,u dnt know wat u ar saying
dnt u know that if oil falls below $2,u will be worst hit.
we will just go back to our farms,wat will u do?

@Muza
it is the best.after all nigeria witnessesd the highest growth in our economy during our pre-oil boom period.

@Muza
it is the best.after all nigeria witnessesd the highest growth in our economy during our pre-oil boom period.

Muza:


militant,u dnt know what u ar saying
dnt u know that if oil falls below $2,u will be worst hit.
we will just go back to our farms,what will u do?

That is what i call growing pains. If oil dips below $2 then you leeches will go back to your farms and leave us alone.
When we're rid of you there's a more than 90% chance oil will rebound and we will survive.

Dont forget much of the non-oil sector is in our hands . . . ports, banking, stock market, industry.