Oil Prices Expected to Drop
October 8, 2007
• by Staff
NEW YORK --- A growing number of oil analysts are forecasting a quarterly decline in oil prices --- the first in a year --- because of the growing gap between crude oil prices and relatively low gasoline prices.
Bloomberg reported that Citigroup Inc., Deutsche Bank AG and HSBC Holdings Plc all expect that oil will slide from last month's record of $83.90 a barrel because of weakening gasoline sales and a slowing U.S. economy.
Earlier this year, higher prices at the pump weren't enough to curb demand for gasoline. But more recently, demand has slowed because of consumer worries about the economy and the threat of layoffs and higher mortgages.
Profits from making fuels are so low, Bloomberg reported, that refiners have 12.5 percent of capacity off line.
Adam Sieminski, an analyst at Deutsche Bank in New York, told Bloomberg that crude may end 2007 at below $70 a barrel, compared with $81.66 at the end of the third quarter.
Originally posted on Fleet Financials