Perhaps
That’s the way it seemed when Cameron Hanover’s Peter Beutel appeared in an interview on Bloomberg’s Nov. 17 “Morning Call” to discuss the drop off in oil prices--from its record-high in excess of $140 a barrel in July to just above $56 a barrel as of Nov. 17. According to Beutel there is still a ways to go.
“Well, every time in the past when we’ve had an oil price bull market, the bear market has taken the bull market high and cut it by a factor of four,” Beutel said. “In this case, that would be $37. So yes, I do think we will see prices at least between $35 and $40--but by February, I don’t know.”
Beutel noted the odd timing of the drop--just four months off the highs and the price has fallen by more than half. The last time oil was at the $35-40 level was in 2004; then prices steadily increased over the next three-and-a-half years before its recent drop off.
“In the past, bear markets have taken anything from four to eight years to play out,” Beutel. “And here we are, only four or five months after the high. So, I do think there has to be a correction at some point. And then I do think that the $37, or $35 to $40 level is somewhere in our future.”
Beutel, president of Cameron Hanover, an energy risk management firm, hasn’t always hit the mark with his short-term forecasts. But Beutel’s “four to eight” year time range is something he has used in the past. At the beginning of 2007 Beutel told CNN’s “In the Money” that oil would fall to $20 per barrel in “the next four to eight years,” with pump prices under $1.50/gallon.
As the price of oil has fallen, so has the price of gas. For the last 61 consecutive days, gas prices have declined. Prices are down more than a dollar from a year ago and down nearly 50 percent since hitting the record high of $4.114 a gallon earlier this year.
