Tags: energy | oil | Richardson | crude

Bill Richardson: Oil Prices May Drop to $45 a Barrel

By    |   Friday, 12 December 2014 04:10 PM

Oil prices have plunged about 20 percent in the past two weeks, and former Energy Secretary Bill Richardson says the party may just be getting started.

January U.S. crude futures stood at $58.16 a barrel Friday afternoon on the Nymex, after hitting a five-year low of $57.95 in the morning.

Richardson told CNBC the price may ultimately fall to $45.

Sluggish demand and burgeoning supply have pressured oil prices. The economies of the eurozone and Japan are struggling, and China's growth is slowing. The International Energy Agency Friday reduced its estimate for 2015 oil demand growth by 230,000 barrels a day.

Meanwhile, U.S. oil production has advanced to its highest level in at least 31 years amid the shale revolution.

While the price move may boost consumer spending, "we're hurting a little bit right now—states like mine, New Mexico, that depend on that budget," said the former New Mexico governor. "A lot of small drilling companies are starting to hurt. A lot extraction is diminishing."

Others too see oil prices falling further.

"In the short term supply is still stronger than demand," Gareth Lewis-Davies, a London-based analyst at BNP Paribas, told Bloomberg. "We are going to see further inventory builds in the first half, hence the realization of further pressure on oil prices."

OPEC's inability to cut production is playing a major role. "The Saudis don’t want to make any kind of cut whatsoever. You are really getting into a price war," Tariq Zahir, a commodity fund manager at Tyche Capital Advisors, told the newswire.

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Oil prices have plunged about 20 percent in the past two weeks, and former Energy Secretary Bill Richardson says the party may just be getting started.
energy, oil, Richardson, crude
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2014-10-12
Friday, 12 December 2014 04:10 PM
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