So far this week oil prices have gyrated in the low $40s, torn between the prospects of an OPEC production cut, various bailout and stimulus plans, and gloomier economic news. On Monday and Tuesday President-elect Obama’s announcement of a massive public works program sent oil higher for the first time in seven days. On Wednesday, oil ranged over $4 a barrel, closing at $43.52, after the week’s stocks report showed substantial gains in gasoline and distillate inventories. China announced that her crude imports in November were 17 percent lower than in October and that oil product imports were the lowest in more than two years.
Numerous organizations have lowered their forecasts for oil prices in 2009, with most seeing oil averaging somewhere in the $40-50 range. The World Bank issued a report forecasting that global demand for oil will collapse next year and commodity prices will not return to the levels seen last summer for the foreseeable future. Many analysts are now talking about $25 oil next year unless OPEC makes substantial production cuts.
Various OPEC officials continue to maintain that there will be a major cut at the Oran meeting next Wednesday. Moscow has indicated that it will announce its intentions about joining in the production cut at the same time.