In the summer, the price of a barrel of oil dropped 35 percent in a short amount of time. It has been headed down ever since. This is because of surging U.S. oil production levels and competition around the world. Experts predict that there is no end in sight for how low oil could go.
Energy expert John Kilduff predicts that the price of a barrel of oil could drop to the $50s by early next year, or even lower. He told CNBC, “All the elements remain in place that got us here. More supply, and less demand, not more.” He continued, “It’s the perfect commodity combination for this thing to stair step lower and lower and lower. Throw in a rising dollar and you’ve got almost the perfect storm here.”
Early in June 2014, crude oil prices were in the $100s per barrel. At the end of November, they had dropped to the $60s. This is obviously bad news for the oil industry. However, low oil prices are good for the U.S. economy and countries that do a lot of manufacturing, like India and China. Lower oil prices mean cheaper energy and transportation costs.
John Kilduff is not the only expert that predicts oil prices are still headed down. Forbes contributor Jesse Colombo said the next support level to watch after $60 per barrel is $40 per barrel. That’s what a barrel of oil was going for in 2009. Oil prices will probably start going back up at that point.
Since it will be some time before oil prices come up, people can enjoy lower transportation costs. If you remember a time when a gallon of gas cost less than $2, you might be feeling the nostalgia soon. Traveling to see family for the holidays will be a lot more affordable than it was last year.