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Could the price of oil fall to $25 a barrel in 2009?

As the worldwide economic slowdown continues to gather pace there are serious suggestions that the price of oil could collapse to $25 a barrel in 2009. This will be marked turnaround from the $150 a barrel price seen earlier this year - a time when many "experts" had been expecting oil to increase to upwards of $200 a barrel. So why are many now expecting a collapse in the oil price?

It is no secret that the price of oil earlier this year was strengthened due to excessive demand from economies such as India and China where industrial activity was running at record levels. These two countries in particular made-up the substantial shortfall across other areas of the world but now the two economies are suffering from the general economic slowdown, there will be a substantial reduction in demand for oil.

Quite how the oil producing country's of the world would respond to such a fall remains to be seen, but it is highly unlikely they will sit back and watch the price deteriorated in the short to medium term. Never before have we seen the price of oil so volatile in such a short period of time and many oil traders have had their fingers seriously burnt.

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