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Energy

Oil Races Back Toward $65

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By Douglas A. McIntyre Published
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The Gulf oil leak and Hurricane Alex are not moving up crude prices.  In fact, the price of oil is back below $75 .Oil dropped into the $65 range last September as demand slackened and refinery usage slowed. The global economic recovery sent crude well over $85 and it touched $90 in April. That was  a year-over-year price increase of 38%.The evidence that global GDP will be well below World Bank and IMF forecasts is growing. China manufacturing is moving toward a contraction. Unemployment in the developed world is still high and governments have put an end to stimulus packages mostly for political reasons. A number of economists say that growth in the West is not self-sustaining. That means without government aid, some of these nations may lapse  back into a recession.

Crude demand in China, which has had a voracious appetite for oil, is likely to fall off. The same thing has probably already happened in the US and Europe. The number of miles driven by consumers usually drops during a recession. So does the demand for petrochemicals.

It is easy to forget that the amount of oil that comes from the Gulf is very modest compared to world production. OPEC says it will keep demand at current levels. Nations such as Russia, Canada, and Norway are still net exporters of large amounts of oil. Their national economies depend on these exports.

The odds are increasing that oil will move back to where it traded during the most difficult periods of the recession. Most of the economic indicators point that way. Ironically, low oil prices help the economy. It will need all the aid it can get.

Douglas A. McIntyre

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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