AUG 3 2008

AUG 3 SUNDAY

CRUDE MAY DROP BELOW $ 100 .

Crude oil prices may fall below 100 $ a barrel in the

coming months after the market reached a point

that has choked demand .

" For the first time probably in seven to eight years

we're predicting oil prices will actually go lower .

There's a possibility that the high oil prices that

we've seen this year will not be expected next year ."

Mr Phil Flynn Vice President and Energy Analyst

with Alaron Trading Corp , told a commodities

outlook meeting at the Chicago Board of Trade,

a CME Group unit.

" Look for oil to get down to double digits , back

near $ 99 a barrel : Mr Flynn said, baring any unforseen

natural disasters like Hurricane that could temporarily

affect supply.

Nymex December Crude oil was down $ 2.52 at $ 123.57

a barrel on Tuesday , down from a record of $ 148.60

set on july 11.

He also forecast retail gasoline prices could fall more

than $ 1 per gallon to about $ 2 and heating oil futures

slip to $ 2.20 a gallon from current levels.

Crude oil has been the leader of the commodities

sector as investors flocked to oil, metals

and grains as a hedge against inflation

and the weak U.S economic outlook.

Commodities have outperformed stocks and

bonds over the past year , with indices

rising to record high in 2008. Despite the

weak U.S economy and mushrooming financial

market crisis, intrest in commodities continue to

be rooted in bullish fundamentals : a weak dollar,

Asian demand for food and raw materials and a

legislated boom in biofuels.


At least in the case of crude oil , however ,

escalating prices appears to be trimming demand,

Mr Flynn said.

The U.S Transportation Department on Monday

reported a steep drop in high way miles driven in

May , by a record of 3.7 %.The 9.6 billion miles less

travelled was the biggest drop ever for any May ,

when traffic usually rises due to Memorial day

holiday and the beginning of summer vacations.

Mr Flynn also noted that Chinese utilities are exporting

oil for the first time in seven years after switching to

coal as an energy source to avoid high oil prices.