With all the financial woes facing the world today and steeply declining oil prices, it may seem like an odd time to invest in oil, but in an effort to prop up the global oil market prices, the United Arab Emirates is doing just that. The recent decline in oil prices may be setting the stage for a steep jump in the near future. Since early October, American oil consumption has fallen by an estimated 2 million barrels/day, and global daily consumption may fall next year for the first time since 1991. Abroad, oil demand is falling and car sales around the world are decreasing enormously. OPEC has tried to stabilize markets by cutting production by 1.5 million barrels/ day beginning November 1, 2008, and another cut may soon be on the way. While oil prices are falling, production costs are also falling, but not enough to outweigh the strain of $50/barrel. prices. With all the cuts in production, if demand begins to rise again, the price of oil will have to rebound to this summer's record prices in order to stimulate supply. Good news for investors in the long run, hard luck for consumers.
See the article here. -V
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