Crude and the puzzle

The short and most visible bubble is the speculation and the price hike of Crude and the fall of the crude oil.The analysts predictions expects a fall in the range of 40-45$ a barrel.

The OPEC countries had announced a cut in their production by about 15lac barrels a day a safeguarding measure prevented further free fall.

See the 2 different news over 6 months period.

Source:Money control.com 
News on 21/11/2008
“Crude prices dropped 7% to below the USD 50 per barrel mark. This is the lowest level since May 2005. Prices slumped as bearish US jobs report intensified concerns of a long and deep global recession and further crushed fuel demand expectations. In after hours access trading, Nymex crude is at USD 48.47 per barrel.

Deutsche Bank is now forecasting prices of crude to continue to tumble to USD 40 per barrel before the end of the year. Traders say if the equity markets continue to decline, one may see watch crude follow on their yields. Falling crude is also a positive for consumers. Right now the national average is USD 2.2 per barrel.”

NEWS Dt july 4,2008

Source:uk.reuters.com.

TOKYO, July 4 (Reuters) - U.S. crude oil futures were steady
on Friday after settling at a record the previous day, when they
also hit an all-time intraday high of nearly $146 a barrel before
trimming gains on the dollar's rise against the euro. * Front-month U.S. crude for August delivery CLc1 was up 4
cents, or 0.03 percent, at $145.33 a barrel on the Globex
electronic trading platform. On Thursday, it settled higher by
$1.72, or 1.2 percent, to a record $145.29, after trading from
$143.22 to $145.85, an all-time intraday high. * NYMEX crude has hit a record for five of the past six
trading sessions. Prices are up 51.4 percent from the beginning
of the year and 103 percent from a year ago.
[ID:nL03150097] * Saudi Oil Minister Ali al-Naimi reiterated his belief on
Thursday that the current rally in oil prices was being propelled
by speculators rather than any shortage of crude oil.

The Indian oil ministry has not given any favorable reply about the price reduction.The inflation rate has fall down well within the range of 8.9 as of November 2nd week.Inflation rate has fall down without any price reduction in the fuel price.

Any way the government had planned a provision for the oil marketing companies to a tune of 245lacs crore for the oil marketing companies working at a crude price of 125$ per barrel.Definitely government’s burden is getting reduced by not doing any change but at the same the private oil marketing companies are exploiting this opportunity to their advantage.

The outlook look like the crude may settle at a price of 60-70USD per barrel foreseeing a period of 6 months.Keeping those parameters in mind the government shall consider reducing the petrol price which in turn substantially reduces the inflation.

The soft target and the victim due to this is  the middle class hard working and the earning revenue generating community .But the government’s  inaction is still a puzzle on this with crude.What is happening really?