The government’s energy forecasting agency looked at the big question of whether oil prices will fall due to a slowing economy and came up with a big shrug of the shoulders. However, at the same time the Energy Information Administration’s economists were avoiding predictions, the same agency’s weekly report on petroleum inventories were telling a pretty stark story. Crude oil stocks jumped 7 million barrels last week, nearly triple what analysts expected. Even the inventories of distillates, which include both heating oil and diesel fuel, rose by 100,000; analysts thought they would fall by 1.8 million barrels, following their usual pattern of winter decline. If the stocks are building at a high rate, market analysts believe that means demand is weakening, and that caused the price of oil to drop to $87.14. We’ll see if that trend continues and leads to lower pump prices in the weeks ahead, instead of the same kind of spring run-up we’ve seen for several years.
One person who thinks that a recession will ease prices this year and possibly next year is Charles T. Maxwell, senior energy analyst of Weeden & Co., who has been watching the oil market’s ups and downs from Wall Street for 40 years. EnergyTechStocks.com has this interview with the dean of energy analysts, in which he explains that the fall in demand and prices we are likely to see will be only a prelude to a global nightmare scenario of scarcity that will begin in 2010.