- Posted June 15, 2012 by
Oil price to reach $ 76
U.S. crude oil prices dropped to $ 84.11 a barrel from $ 108 in last 3 month, Brent oil has fallen from a peak of $128.40 and in this time it's price is $ 96.91. percent this quarter, its biggest such drop since the fourth quarter of 2008. This is likely to result in still lower gas prices for Americans just in time for summer vacation. Although, if Brent crude prices continue to fall, Saudi Arabia is expected to cut production which could drive prices back up. Saudi Arabia increased its production to replace the oil European countries bought from Iran. American and EU diplomats encouraged the Saudis to increase production to stop the meteoric rise in world gas prices which were threatening to put the world back into recession.
In fact, some European countries did fall into recession. The reason for the drop in oil prices is that there is some hope that Iran will agree to allow UN inspectors into its nuclear facilities.
The U.N.'s International Atomic Energy Agency expects to sign a deal with Iran soon to unblock investigations into suspected work on nuclear bombs in the oil-producing country. This move is likely due to the harsh sanction the Obama administration has put on Iran. In the real world of a free market economy, oil inventories are increasing, not decreasing as speculators were betting on. Speculation in NYMEX is a good idea in this situation but if we look in other side we can see that for producers it's a sign of loss, they losing money for per barrel, in summer their expenses rising and incomes losing it's strength.
What is a short-term price forecast?
Crude oil will continue to fall and it will reach to $ 76 for per barrel in Jule and this price will move in everyday trade between 76-80 $ in August. Brent oil will continue this process and may will reach to $ 84-87 within next several month.
By Personal Financial and Investment Consultant - Irakli Berdzenadze