Tags: Schork | oil | prices | crude

Stephen Schork: Oil Prices Will Slide to $42

By    |   Wednesday, 17 December 2014 10:36 AM

U.S. crude oil prices keep hitting five-year lows, and Stephen Schork, editor of The Schork Report, says the party is by no means over.

U.S. January crude futures fell to a low of $53.60 a barrel Tuesday on the Nymex and traded at $55.61 in the afternoon.

"How low can we go? We are beyond the point of economics where the economical price for pulling oil out of the ground is. We're completely disconnected from that, because, as we've seen with the ruble and as we've seen with the demand issues elsewhere, there's no telling," Schork told CNBC.

"I'm still positioning for lower prices," he noted. However, Schork admitted, " We could already hit bottom or could be heading lower another $15. That's the scary thing about this. This is 2009 all over again."

The first target for U.S. West Texas Intermediate crude is $52 and then $42, he said. "Can we get there? Absolutely."

Sluggish demand, thanks to stagnant economies overseas, and bountiful supply, boosted in part by exploding U.S. output, are pushing oil prices down. OPEC's decision to refrain from production cuts at its meeting last month has played a role too.

"This is a new world in which there is no price setter," Daniel Yergin, eminent oil historian and vice chairman IHS consulting firm, told Bloomberg. "Oil is trying to find its bottom."

While falling oil prices help consumers by making gasoline prices cheaper, oil's plummet isn't a sign of health in the world economy, Schork said.

"What is this price decline telling us? Commodity prices don't drive economies. Economies drive commodity prices," he said. "The United States is the only shining light out there economically. But with a rising dollar, . . . who are we going to sell our manufacturing exports to?"

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U.S. crude oil prices keep hitting five-year lows, and Stephen Schork, editor of The Schork Report, says the party is by no means over.
Schork, oil, prices, crude
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2014-36-17
Wednesday, 17 December 2014 10:36 AM
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