More proof that there was absolutely no reason for oil prices to be $75 per barrel... the price falls and Venezuela says they are cutting supply. The price falls some more. OPEC says they may cut output. Prices fall some more. There NEVER was a supply issue. There NEVER was any reason for oil to be as high as it was. There's plenty of oil out there and the technologies we've got are getting better and better at extracting it. The tar sands in Canada put the rest of the world to shame. Once the new plants get going full steam up there, there will be even less of a concern about the stability of the middle east. We won't need the middle east. As it is, half of our oil comes from ourselves. Half of the remaining amount comes from stable areas of the world. Why does the market get so freaked out about instability in 25% of our suppliers? Who cares? Is that cause for tripling of the price of oil? I don't think so. The only reason that the price rocketed upwards was because of speculators like the huge hedge funds pouring billions into the energy markets. Amaranth and MotherRock just got burned big time and lost a third and ALL of their assets respectively, so it wouldn't surprise me to see the rest of the hedgers start pulling their money back out, which will really knock some dollars off the price of energy.
If OPEC does cut production, I think it will have the opposite of their desired effect. I think prices will continue to come down because then the market won't care as much about potential disruptions as there will be excess supply remaining untapped.
Either way, my prediction is that the price of oil will keep falling. Will it get below $50? I think so.
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