Per last Sunday’s report to subscribers, mentioned here in Monday’s post, the price of oil has continued falling after OPEC decided last weekend to keep production at current levels. Crude’s price per barrel is down another 13% since last Friday’s close.
The reason is that recession data keep getting uglier. Auto sales in November hit a 26-year low. The holiday shopping season is off to a slow start. The financial crisis looks to be moving from mortgages to credit cards, according to Meredith Whitney, managing director of Oppenheimer & Co., who told the Financial Times that she’s “more bearish” than at any time during the last 18 months.
The oil market still believes that demand will stay slow for some time, and that OPEC and other producers will have little control over the price of the commodity, even if they reduce output.
Yet, the recession will one day end and when it does, demand from China and India will resume and the finite supply of oil will become more dear. I continue to think we’re coming up on a great moment to invest in oil.
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