Tags: Deutsche | Sankey | oil | 72

Deutsche Bank’s Sankey: Oil Will Plunge More than 20% over Next Year

By    |   Friday, 21 Sep 2012 09:16 AM

A continuing slump in demand will send oil prices down another 22 percent by the end of 2013, says Deutsche Bank oil analyst Paul Sankey.

Crude for October delivery settled at a six-week low of $91.87 a barrel on the New York Mercantile Exchange Thursday. Deutsche Bank’s target is for a drop to $72 by the end of next year.

The biggest factors driving the move will be sliding demand in the United States and China, Sankey tells Yahoo.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

U.S. demand is in a secular decline thanks to tremendous energy efficiency here, particularly from autos, he says. The average car sold in the United States today is 25 percent more efficient than the one being destroyed, Sankey says.

“The efficiency story is more dramatic than people realize.”

As for China, the slowdown of its economy — caused partly by Europe’s own slowdown — will suppress oil demand, he says. “Oil is falling due to wider issues with the global economy.”

The drop in oil prices will ultimately pass through to U.S. gasoline prices, Sankey says. He sees U.S. gasoline demand plummeting 50 percent in the next 20 years. “That’s not going to make prices go up.”

Given the rapidity of oil’s slide — it traded above $100 just last Friday — many market participants expect a correction.

The plunge is "excessive," according to a Commerzbank research report obtained by Reuters. "We expect to see a counter-movement in the next few days," the bank’s analysts say.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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A continuing slump in demand will send oil prices down another 22 percent by the end of 2013, says Deutsche Bank oil analyst Paul Sankey.
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2012-16-21
Friday, 21 Sep 2012 09:16 AM
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