U.S. Slowdown Putting Breaks On Next $100 A Barrel Trade? - Energy Source with Sharon Epperson

Cities With the Most Home Price Reductions
The real estate website Trulia.com found that 25.6% of US listings have seen at least one price reduction.
Madoff Property Auction
Bernard and Ruth Madoff's personal possessions, seized by the Feds earlier this year, will be auctioned this weekend.
Berkshire Hathaway's 15 Biggest Stock Holdings
The company's most recent SEC filings reveal where the Oracle of Omaha is most heavily invested.

CNBC ON DIGG

Text Size

Jan.10

1:39 PM ET

Thursday, 10 Jan 2008

U.S. Slowdown Putting Breaks On Next $100 A Barrel Trade?

Posted By:Melissa Francis

Topics:Economy (U.S.) | Retail Sales | Recession | Energy | Economy (Global)

Sectors:Retail | Oil and Gas

Oil Barrels
Traders are looking at the latest retail sales figures and thinking twice about snapping up crude. According to Thompson Financials combined retail index, November and December sales stalled to 2004 levels.

It's one more sign that the economy is slowing if not contracting. And it doesn't really matter which in the oil pits. Anything other than expansion means demand won't continue to gallop ahead of production and perhaps triple digit oil is overblown.

And speaking of demand, the EIA's Short Term Energy Outlook for January pounds another nail into the energy bulls coffins. Gasoline demand in the fourth quarter of 2007 fell flat compared to a year ago. That hasn't happened for seven years!

Click for related content

Sales Outpaced Inventories in November, Led by Oil

For so long, we have endured the argument: "people are driving to work, to soccer practice… it's impossible to put on the breaks when Americans are going to places they must go." Perhaps not. And certainly if stores sell less merchandise, there's less energy guzzling production and shipping happening.

Calls, like Jeff Rubin's at CIBC World Markets, echo through the markets far less frequently these days. He thinks we'll see $150 oil in the next five years, along with $4.50 a gallon gas. That doesn't sound far fetched, just far off in the future.

The big sign post in the road now will be the government GDP number for the fourth quarter of 2007. That comes on January 30th and if it's a small number, or dare I say, a negative one, crude's slide may have only just begun.

Questions? Comments? energysource@cnbc.com

Tools:

Print Email