Oil At Lowest In 5 Years - Tumbling Gasoline Prices

Just 6 months back, crude oil was at its peak of about US$147 per barrel, fueled by speculation and the forecast by economists, traders, investors and speculators of growing demands in this globalized economy, it had gone from below US$70 per barrel and spiked to US$147 per barrel in a few short months. It defied logic and looks set to rise even more. All over the world people were devastated, due to increasing oil prices, the cost of daily necessities increased. There were strikes, unrest at various parts of the world. In countries where huge petrol subsidies were in place for years, their government had to re-look and subsidies were reduced, thereby adding fuel to the fire. People's livelihood were threatened, small businesses could no longer operate due to higher costs further adding further tears to the social fabric.

Then in July 08, the global demand fell due to the gloomy economy outlook and credit crunch caused by the US sub-prime mortgage market collapse. Crude oil prices started sliding, traders, investors and speculators fled from the commodities market. Crude oil prices has now fallen to less than US$35 per barrel. When oil prices were at its peak, people were going out less, spending less and hopefully saving more and the impact was a stagnant economy at best. With crude oil prices at its 5 year low, will people start spending and giving the economy a boost? No one knows for sure as the economy outlook is still bleak.

Trying to control the oil prices, OPEC (Organization of Petroleum Exporting Countries) is now looking at reducing production, that may send crude oil futures trending upwards if there is big cuts in oil production, but with the global downturn, what is a big enough reduction and will that further curtail spending again?

2009 looks set to be a turbulent year, at least for oil prices.