Uh-oh. While the decline in oil prices to $70 a barrel has been
good for drivers, if prices head any lower, it may attract the
attention of OPEC. On the other hand, if OPEC tightens supplies, it
could attract the attention of exchange traded fund (
Analysts say that if oil hits $65 or less, OPEC says it will
attract their attention. That's not the lowest price OPEC would be
comfortable with, but it's a price at which they would begin to
report Fiona MacDonald and Anthony DiPaola for
. For today, at least, oil prices are holding their own and are up
3% so far on a positive durable goods orders report.
But what of the future?
"Peak oil" refers to the point at which more than half of the
world's oil reserves are tapped. Once we hit it, global oil
extraction will begin to enter a terminal decline. However,
investors who focus on how much crude oil is left may be missing
the point. [
Oil ETFs Look Shaky.
Money Markets for Daily Markets explains that
it means the peak of production-the industry's ability to get it
out of the ground and to market, not the depletion of it. Rather,
exploitation of unconventional oil will provide additional liquids,
but likely at ever-higher costs.
The IEA recently raised its forecast for world oil demand by
1.67 million barrels to 86.6 million barrels per day in 2010. As
oil production is and extraction is waning, the demand for oil may
skyrocket in the coming years. Are investors ready for that? [
ETFs for the Jim Rogers Commodities Bull.
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Tisha Guerrero contributed to this article.