Khelil Predicts Oil At $170 By The End Of 2008? Usually I Might Agree, But Not This Time

Implications: Chakib Khelil, Algerian Oil Minister and OPEC President, predicts that oil will climb to $170 a barrel by 12/31/08 due to the likelihood that political pressure on Iran as well as other conflicts and turmoil will continue, and on further speculation that the US dollar will see further decline (weakening against the Euro in particular). Khelil, as well as most other OPEC oil ministers, believe that the increasing price of oil is not linked to supply, and that there is more than enough oil in the market to meet the international demand. I have followed Khelil’s public words for over 5 years now, and when he says / forecasts something regarding crude, particularly with regard to its future price, I have calculated that the man is 84% accurate.  So it may be a bit of a surprise that I have to disagree with his prediction of $170 by the end of 2008, especially when it almost seems almost a certainty to some that oil will continue rising.  My commentary explains the logic.

Analysis:  I have decided to be bold in this commentary – lots of predictions (and remember, when we speak of forecasting ahead of present time, some things may not make much sense, which is something perfectly normal, otherwise it would not be called the future):

I believe we have already entered a much different US socio-economic and global monetary fiscal period.  It only has happened recently, and to many, it feels like they have been spun-around 180 degrees not believing all the Market losses as of late, yet for those that are fully aware of the current and impending changes, many of which are cyclical (don’t forget the “rules of Mother Nature”, Fibonacci and other mathematical / energy relationships associated with teachings in the Drunvalo Melchizedek books called “The Ancient Secret of The Flower Of life:  Parts 1 & 2”), the relationships between oil, gold, currencies, fiscal policies and a host of different types of threats are all changing.  Impacts on these “things of worth” are increasingly less related to each other.  That which we have become accustomed to witnessing is really beginning to change.  And I forecast a notable increase in erratic and bizarre economic and fiscal movements (as well as socio-economic shifts) and “odd” relationships starting in September 2008 with new (away from the old) signals getting increasingly stronger and new trenches dug as we go into the middle of 2009, particularly with a new president at the helm.

Khelil says that fuel demand grows in the United States during the summer period.  That would be true with a “normal” summer.  But 2008 is very likely not going to be a “normal” summer.  This summer will likely be different:  fuel demand will likely stabilize in the USA (compared to rising demand during a “normal” summer), and will even probably slightly decrease in certain regions of the country that are experiencing highest gasoline prices coupled with the most foreclosures per normalized population.

Despite surging demand this summer in China and India, and of course the ever-continuing threat of terrorism around the world, and, even though oil will likely extend gains when ECB policy-makers boost rates on July 3 by a quarter-percentage point to contain inflation – which will further weaken the U.S. currency – I believe that oil prices starting near to the end of July and continuing for most of the summer will more likely back-off their recent highs and start to decline, staying more within a $112 to $128 range.  The main reasons (in importance):  1) fuel demand in the USA will likely stabilize and/or slightly decrease; 2) Iraq will put an additional 10-15% of oil on the market (before taking some of it off later due to changing policies and more violence in the country); 3) generally, less violence in oil-affected areas; 4) a general slow increase in rates to fight-off inflation – but in the ‘new arena of relationships” – this will mean that a slight decrease in the US currency value will not necessarily boost oil prices – BECAUSE more and more oil payments will be made in other currencies, particularly the Euro.

Certainly, this is lots to think about, but there’s my seven cents for the time being.