Where Do Crude Oil Prices Go From Here?
The steep drop in crude oil prices from the July, 2008 highs of $147 has punctured the revenues and earnings for every major oil company. The companies are still making money, just not on the scale they did in 2008. Is Buffett Playing It Safe? Estimates of revenues for Exxon Mobil (XOM) for 2009 are about $271 billion, compared with 2008 actual revenues of $477 billion. Analysts expect Exxon’s earnings for 2009 to reach an EPS of $3.93, compared with $8.47 in 2008. For the first ten and a half months of 2009, crude prices have risen slightly more than 60%. Gold has risen more than 30%, and copper is up nearly 90%. The rise in crude prices can partially be blamed on the depreciation of the U.S. dollar. However, the dollar has weakened by just 12% to the euro. The full story goes deeper than just a weak dollar. Another factor is the resurgence in economic growth outside the U.S., particularly in China. That growth drives up commodity prices, including crude, and puts additional downward
