Oil prices touched a new 14-month low beneath $70 a barrel Thursday, bringing its price to less than half its July record high after the government reported massive increases in U.S. crude and gasoline supplies.
Investors took the news as more evidence that a global credit crisis and a shaky economy are curbing demand for oil.
"Economic weakness is hitting the stock and oil markets, but the oil price fall is also reflecting a lack of demand. It is very difficult to buy oil if you are having a hard time getting credit lined up," said Francisco Blanch, head of commodity research at Merrill Lynch.
Meanwhile, OPEC said on Thursday it would hold an emergency meeting next week suggesting they might attempt to reduce supplies.
Is oil’s huge slide combined with OPEC’s interest in cutting supply creating a buying opportunity?
Probably, according to Joe Terranova. “Just as there was an overshoot on the upside there is an undershoot on the downside,” he says on CNBC’s “Closing Bell.”
But that doesn’t mean the time to buy is now. Terranova is particularly concerned by Monday’s action. On a day “when the equities markets exploded the recovery in oil was tepid, ” he says.
“Oil takes the pulse of the world economy,” and right now demand is weak.
It seems for the time being oil traders expect prices to continue lower.
Prices At The Pump
But what’s bad for oil bulls is good for drivers. At the pump, a gallon of regular gasoline shed another 4 cents overnight to hit a new national average of $3.084, according to auto club AAA, the Oil Price Information Service and Wright Express. At this rate, the national average for gasoline could fall below $3 by the weekend -- a level not seen since Feb. 16.
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Terranova Owns (AAPL), (EXM), (FCX), (FTO), (MA), (NOV), (POT), (X), (VLO)
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO
Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (CNW), (OFC), (DLM), (DRH), (DLR), (EPR), (EXR), (FL), (SLB), (LNET), (MAC), (DBC), (DBV), (SKT), (UA), (BLV), (VV), (CLB), (GWX), (IGE), (FSMXX)
Virtus Investment Partners Owns Seagate Tax Refund Rights
Virtus Investment Partners Owns Seagate Technology Tax Refund Rights
Virtus Investment Partners Owns More Than 1% Of Shares Of Incitec Pivot Ltd.
Virtus Investment Partners Owns More Than 1% Of Shares Of Essex Property Trust Inc.
CNBC.com with wires