Oil Prices Continue to Fall Amid Market Crisis

Oil prices have continued to drop and have now fallen below $100/B. The growing financial crisis and weakening economy will continue to have an impact on prices. What may be even more amazing is that prices declined in the midst of supply disruptions caused by Hurricane Ike.

Forecasts of $200/B oil seem rather distant in light of the current situation. The question now is not how high, but how low will prices fall. As a survivor of the 1986 and 1998 collapses (yes I even have a tee-shirt), the spectre of plunging rig counts and layoffs are still very painful. The industry should be wary of another collapse especially since fundamentals seem to have been replaced by speculators.

My advice is to hold on to your seat because it looks like a very bumpy ride.