Oil Analyst Reverses Trend of High-Price Forecasts; Calls $35-40 Oil a Possibility
Thatâ€™s the way it seemed when Cameron Hanoverâ€™s Peter Beutel appeared in an interview on Bloombergâ€™s Nov. 17 â€śMorning Callâ€ť 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.
â€śWell, every time in the past when weâ€™ve had an oil price bull market, the bear market has taken the bull market high and cut it by a factor of four,â€ť Beutel said. â€śIn 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 donâ€™t know.â€ť
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.
â€śIn the past, bear markets have taken anything from four to eight years to play out,â€ť Beutel. â€śAnd 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.â€ť
Beutel, president of Cameron Hanover, an energy risk management firm, hasnâ€™t always hit the mark with his short-term forecasts. But Beutelâ€™s â€śfour to eightâ€ť year time range is something he has used in the past. At the beginning of 2007 Beutel told CNNâ€™s â€śIn the Moneyâ€ť that oil would fall to $20 per barrel in â€śthe next four to eight years,â€ť 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.