January 13, 2016

THERE IS NO FLOOR:

$10 oil: Crazy or the real floor beneath the oil crash? (Matt Egan, January 13, 2016, CNN Money)

Just this week Morgan Stanley warned that the super-strong U.S. dollar could drive crude oil to $20 a barrel. Not to be outdone, Royal Bank of Scotland said $16 is on the horizon, comparing the current market mood to the days before the implosion of Lehman Brothers in 2008.

Standard Chartered doesn't think those dire predictions are dark enough. The British bank said in a new research report that oil prices could collapse to as low as $10 a barrel -- a level unseen since November 2001.

To put that in context, average U.S. gas prices slipped to $1.12 a gallon back then. American drivers are already cheering a steep decline in gas prices below $2 a gallon in recent weeks.

A "floor" in oil prices can only be put in once the "entire market" agrees prices have "undershot too far," Standard Chartered said. "That is likely to be a very low price," the firm said.

Posted by at January 13, 2016 7:57 PM

  

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