U.S. crude oil prices fell almost 60 percent to a 5 ½-year low of $43 a barrel last month from $107 in late June.
Now they have rebounded 20 percent from that low to $51. But ace investor Jim Rogers says the rout likely isn't over yet.
"Whenever you have a major crude collapse like the current one, there has to be a rebound," he told
The Economic Times. "However, normally the prices test the bottom before rebounding. I am not sure if we have seen the bottom yet."
A rally is normal. "And then somewhere along the line it peters out. Then you have another test of the bottom. I suspect we will do so this time too," Rogers explained.
"Owing to the collapse in oil prices, inflation everywhere is down. Oil may stay down for a while, or even go further down and test the lows. Maybe prices will go up by a few more dollars. But by spring this year, we will probably see a new test of the bottom."
He doesn't think gold is a good bet right now. "I am not a buyer now. I have hedged some of my gold, but not all of it. But I do expect another chance to buy gold later."
Meanwhile, we can thank Saudi Arabia for much of the oil price plunge, according to Richard Fisher, president of the Dallas Federal Reserve. "The Saudis have engineered" the move, he said in a recent speech,
CNNMoney reported.
Saudi Arabia led OPEC to reject production cuts, and the nation has offered price reductions to its customers. Presumably the Saudis are trying to drive high-cost suppliers, such as U.S. shale oil producers out of business.
"We are a huge supplier of energy. The Saudis took a while to realize what was going on," Fisher said, referring to the growth of U.S. output, which has hit its highest level in at least 31 years.
Low oil prices also cause pain for Iran, Saudi Arabia's hated neighbor, he noted.
Given Saudi Arabia's policy, Fisher doesn't expect oil prices to rebound back to $100 anytime soon. "From a budget stand point, [the Saudis] have reserves that can handle this," he said.
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