For all those who were talking about $200 per barrel oil, bite your tongue (at least for now). For it appears that oil has finally reversed its stratospheric rise in recent days. According to a story on CNN from earlier in the week, some of the major reasons for the drop below $130 per barrel have been sell-offs in the natural gas market as well as diplomatic goodwell gestures from the US to Iran. But one of the other major reasons is simply reduced demand (thanks to the invisible market hand). As consumption has dropped -- and as some speculators have begun to close out their positions -- prices have begun to come back down to earth. Last week, someone asked me about my unscientific oil price predictions for later this year. I called for $125 a barrel based on forecast demand. It looks like we might be seeing this trading range sooner rather than later. Let's hope it crosses the $125 threshold, making global sourcing decisions that much more palatable and profitable for companies once again.
Postscript: Looks like we hit my prediction much faster than I would have thought. Oil went down to $123 in trading today. Let's hope the fall continues.
- Jason Busch