Thanks to record warm temperatures in December and January, lots of profit taking by commodity traders and a drastic increase in worldwide inventories, the price of oil was slid fast and hard to start 2007, dropping into the upper $40s and holding in the lower $50s for the better part of two weeks. Even in the face of falling oil production from OPEC, it looked as if oil prices were going to continue to fall.
Despite the fact that everything was pointing to a continued downturn in the price of oil, when looking out towards this summer, things looked a bit uncertain. This has lead many people to ask - is this recent run of $50 oil really the lowest price levels we'll see for the rest of time?
Like seemingly everything else, the answer all depends on who you ask. When one report comes out predicting $70 a barrel prices for this summer, another report comes out predicting prices to hold around $50 and continue to slide into the fall.
Unfortunately, I think the more realistic scenario will be higher oil prices. With the expansion and industrialization of India and China (who combined equal nearly one-third of the world's population), not to mention the fact that the United States and the rest of the Western World haven't slowed their consumption, it certainly seems that demand for oil is going to continue to skyrocket.
Whether or not supply can keep up is an entirely different story and that's why prices will continue to increase.
The days of cheap oil are dwindling and they're going to come to an end sooner than you'd think.
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