EASY TO FORGET...:

Verleger Sees $20 Oil This Year on ‘Devastating’ Glut (Grant Smith, 7/16/09, Bloomberg)

Crude oil will collapse to $20 a barrel this year as the recession takes a deeper toll on fuel demand, according to academic and former U.S. government adviser Philip Verleger.

A crude surplus of 100 million barrels will accumulate by the end of the year, straining global storage capacity and sending prices to a seven-year low, said Verleger, who correctly predicted in 2007 that prices were set to exceed $100. Supply is outpacing demand by about 1 million barrels a day, he said.

“The economic situation is not getting better,” Verleger, 64, a professor at the University of Calgary and head of consultant PKVerleger LLC, said in a telephone interview yesterday. “Global refinery runs are going to be much lower in the fall. If the recession continues and it’s a warm winter, it’s going to be devastating.”

Crude oil last traded at $20 a barrel in February 2002.

...it was $20 before speculators started taking advantage of the WoT. A return to its natural price would point up just how badly central banks biffed in fighting a non-existent inflation.

Posted by Orrin Judd at July 16, 2009 12:36 PM