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Oil prices hit bear market territory

Misty

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Oil dropped to less than $117 a barrel thanks to a strengthening US dollar. That means it has dropped 20% in the last month - the technical definition of a bear market (by contrast, oil rose by 200% in the previous year).

Oil has been dropping precipitously for the last month since reaching a high of $147 a barrel. The big reasons have been the worldwide slowdown, precipitated by collapsing housing prices, as well as a rebounding dollar that has recovered strength thanks to a weakening eurozone and a steady interest rate, and cutting of subsidies in developing nations like China and India.

At the rate things are going, there is even talk of gasoline returning to $2 a gallon (though certainly not the $1 it was in the early 2000s). On the other hand, others insist the market fundamentals of the futures market are still way off - big developing nations are subsidizing gasoline, while new supplies are shrinking and harder to get (think tar sands).

Your opinions?
 

!Tommy

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Thank god!! It's about time. I'm tired of having to spend an average of $80 a week on gas. Hehe, I remember when gas was $0.88 a gallon. Those days are long gone though but I'd like to see $2.00 a gallon again. It's about time things go back in the right direction!!
 

bell02+

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Doubtful, we'll for me anyways. Last time I saw a gallon of gas under $2, I was in diapers. (An exaggeration, but I remember being in grade school and Jr. High seeing gas under $3. However, the gas is just high in general in California)
 

Every Breaking Wave

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When my parents moved to Canada in the mid-80's, gas was around the $0.7 per-litre mark. It reached almost double that in some areas of the country this year. Yet only three years ago (perhaps as recent as two) it was still about $.9 per-litre.

It's never going to go under $1.00 per-litre again.
 

Misty

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Doubtful, we'll for me anyways. Last time I saw a gallon of gas under $2, I was in diapers. (An exaggeration, but I remember being in grade school and Jr. High seeing gas under $3. However, the gas is just high in general in California)
Yeah, in average parts of the country gas was around $1/gallon for a while after the 1998 commodities crash, but rose to about $2 after the Iraq War.
 

Girafarig_Magcargo

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Considering that Russia and Georgia are going to all-out war in the oil-rich Caucasus, don't expect this price dip to last long unless some reconciliation happens over the weekend.
 

The Big Al

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And we have the problems in Turkey regarding the also oil rich Kurdistan.

But I think an important factor in this dip is that the speculators realized they were strangling the goose that lays the golden eggs. Many speculators are actually hedge funds that have interests in several different markets. As oil approached $150 it started to drag on other markets and the funds were losing money. So they took money out of oil to sure up other markets.

Also, the dollar should remain stable for a while against other currencies as long as the fed doesn't do anything and foreign currencies don't fluctuate too much. Both of which are likely for the next couple of months.

So while oil's drop probably won't continue like this, it should stabilize at a lower price.
 

Misty

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the fed is liable to start considering rate hikes - at least three of the board members are highly concerned about inflation.
 

Satoshi-kun

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It'll never be the $0.69 that I remember back in the late 90's in my area, but $2.00 would be a godsend. I think I could live with that.
 

YamiLink03

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Ya know I was just discussing that with my mom today while we went to go get something to eat at Wendy's. Gas prices here in Texas are down to $3.50. And this reminds me of the good ol' days when gas prices were $1.50....theres an abandoned gas station down the street with the signs still up. Serves as a good memory. =)
 

lthiele

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Petrol here is down to $1.49/litre, still twice as much as it was a few years ago (i remember when it was about 80c), but certainly a relief. It was almost $1.70.
 

Shinx3000

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People in the US seem to compalin about how much Oil and Gas prices are.. if you lived in UK you'd know how bad it gets. At moment its £1.16 ($2.32 USD or around) a litre in some places here, for a while it went up a penny a day in some stations, then stopped. I know a gallon in UK is different than a US gallon, but if we got what the US got for a gallon, we would not complain much.
 

Misty

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Yeah, US taxes on gasoline are far lower than Europe's. Then again, it's more tolerable because Europeans drive a lot less.
 

The Big Al

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Those taxes also go into various services that the people use which makes it even more tolerable. I'd pay $6.00/gal if it meant I wouldn't have to pay for health insurance and college tuition.
 

lthiele

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Well i live in rural Australia where there is NO public transport, NONE. We got $60 worth in the Magna last week and have had to put another $60 in today.
 

YamiLink03

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Because they have better public transportation systems than the US does.
Save certain cities of course. Dallas has by far the best public transportation system in the US and only rivaled by China and Japan in the world I think. Look it up. It's called DART. Not to brag or anything hahah ^_^;;
 

Lilac Hill

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Well i live in rural Australia where there is NO public transport, NONE. We got $60 worth in the Magna last week and have had to put another $60 in today.
We don't even get it in semi-rural areas (bar cities via the freeway).

Petrol's creeping down to $1.40/Litre. Veeeeeeeeeery slowly. But when it goes up...
 

Amewsment

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Save certain cities of course. Dallas has by far the best public transportation system in the US and only rivaled by China and Japan in the world I think.
Pretty sure Berlin and London do it better.
 
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