Oil prices fell another 2.3 percent to below $39 a barrel on Tuesday as a raft of gloomy economic data reinforced expectations that world energy demand will shrink for the first time in 25 years.
Robust demand from emerging markets such as China had pushed oil prices to their peak above $147 a barrel in July. Now even the dynamic Asian economies appear to be suffering.
“I don’t think the global consumer could handle the dramatic rise in energy prices that we saw in June and July. It was too far too fast,” says Joe Terranova on CNBC’s Closing Bell.
However, Terranova believes that long-term oil is heading higher. He can't imagine any other scenario as emerging markets resume their plans to put up new buildings, improve roads, and generally advance their standard of living.
But timing is everything.
"People are sitting on cash -- big lumps of it," adds Mark Mathias, chief executive of commodity fund manager Quantum Asset Management. "Everyone is worried about when to go back in. Long-term, oil is cheap, but who knows where it goes in the short term."