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Merrill Lynch predicts that Oil could fall to $25

[harry22]

or lower.

Crudeoilprices may crash below $25 a barrel next year and gas prices couldfallbelow $1 a gallon if the global recession spreads to China, anenergyanalyst and CEO said Thursday.

Demand for oil will continue to decline in 2009 as economic slows to its weakest level since 1982, Merrill Commodity Strategist Francisco Blanch concluded in a report.

"A temporary drop below $25 a barrel is possible if the global recession extends to Chinaandsignificant non-OPEC cuts are required," Blanch was quoted byBloombergas saying. "In the short-run, global oil demand growth willlikely takea further beating as banks continue to cut credit toconsumers andcorporations."

In October, when oil was trading foraround $100 abarrel, Merrill predicted prices could drop to $50. Oilfell Friday to$43.64 a barrel in electronic .

The last time crude fell below $25 a barrel was November 2002.

Meanwhile, Gulf Oil CEO Joe Petrowski said on Wednesday that the price of oil could sink even lower — to $20 a barrel — and gasoline prices could drop as low as $1 a gallon by early next year

WithChinafalling into a recession at a rapid pace OPEC will not be able tocutOIL fast enough to offset the decline of OIL demand and prices.

Merrill Lynch also said that Oil sand companies could begin shutting in productions if oil fall below $38 a barrel.

(The Globe and Mail, Sat, Dec 6, 2008)