Market analysts don't like being pinned down to precise specifics on their price prognostications because they don't like being wrong. And the veteran analysts also know markets are fickle and will prove most of them wrong most of the time.
With that caveat out of the way, this long-time market analyst is forecasting one more leg down in crude oil prices, likely in the coming few weeks. The downside price target for Nymex West Texas Intermediate crude oil futures is $75 a barrel.
Once Nymex crude oil touches the $75 mark, most of the sellers in that market will have become exhausted. A final, brief spike below the $75 level cannot be ruled out before prices start to recover.
There are a couple compelling factors to support the notion crude oil and several other commodity markets are near price bottoms. For the past few months the world's major economies have been sputtering, with focus on such becoming keener in recent weeks. Last week's assessment of the U.S. economy from the latest meeting of the Federal Open Market Committee of the Federal Reserve highlighted the overall soft U.S. and world economic conditions.
Importantly, markets are always factoring in expected events well before they ever occur. It's now increasingly likely the crude oil market's recent price action has factored into its price structure the anemic world economic conditions that also mean decreased demand for liquid energy. While there may be additional dour world economic statistics released in the coming weeks or few months, the crude oil market realizes this and oil prices will likely not continue to trend lower unless the world economic scene sees a marked turn for the worse, which is unlikely.
On the demand side, gasoline prices in the U.S., the world's biggest energy consumer, are on average well below $4 a gallon after analysts last winter predicted U.S. gasoline prices could reach $5 a gallon this summer. (Remember that most analysts are wrong most of the time.) In fact, this week gasoline prices in South Carolina were reported coming in below $3 a gallon. The declining gasoline prices in the U.S. are a booster shot for the U.S. consumer. That's important on two fronts: it suggests consumer demand for gasoline will creep back higher in the coming weeks and less money spent at the gas pump means more disposable consumer income to help jumpstart the flagging economy.