I’m not sure it falls from end of Q1 levels as I see that as the low point of US GDP and motor fuel consumption for this cycle.
This is another example of forecasters not looking to the federal deficits as the drivers of the world economy.
And even a further drop of 2.4 million bpd isn’t enough to dislodge OPEC and the Saudis as they can easily cut that much if they want to support prices.
More interesting is the cut in prices by the Saudis published last week. Seems maybe they aren’t ready for higher prices yet, but instead want to keep prices here to keep investments in substitutes unprofitable. So I agree oil prices could stay in a tight range for a while.
by Christian Schmollinger
April 13 (Bloomberg) — Crude oil fell in New York after the International Energy Agency said 2009 demand may slump to the lowest in five years as factories shut and car sales tumble amid a deepening global recession.
Oil consumption will fall 2.4 million barrels a day this year, about the same amount that Iraq produces, to 83.4 million barrels a day, the IEA said on April 10 as trading in New York and London was closed for the Good Friday holiday. U.S. crude supplies are at their highest since July 1993, the Energy Department said on April 8.