OIL PRICE PREDICTION FROM MY OLD MERRILL PAL

My friend from 20 plus years ago sent the following insights.

"I know today is an ugly day. Everyone is concerned with the price of oil and
oddly that the economy is weaker than expected with poor job creation
results.

Interesting thing though is to look at the commodity charts on the "Sharp
Chart". All commodities seem to be trading up 10-13 %. I am guessing this is
the stuff the Fed reviews and sweats and will do anything to prevent rampant
inflation.

The funny thing is the energy index is up 45%. If you go back over time, you
will note energy seems to have the higher variances but it also trends back
to the commodity norm. If economic demand ( everyone blames China!) is
growing, then why would all commodities not be increasing at roughly the
same rate? Furthermore, Chinese demand for oil is growing, but look at the
economic trends in Europe. Not very pretty.

My conclusion is that we may see some additional rallies in oil prices in
the short term due to continued SPECULATION but sometime this year I would
expect oil to easily break below the $40 mark."

I agree with his assessment. I am not so sure about $40 but a drop from $57 to $45 would be a nice relief in a strong economy.