Upendra Kulkarni, Fortress Financial, feels the same and said, “It does not look like crude oil will cool down. It is too much of a speculation for retail investors. One camp is saying that it might touch USD 100. Money globally involved is huge in all the sectors and there are specialized investors in every sector, so I don’t think it’s going to make much of a difference. Look at India; what we have here is not even a fraction of a fraction. It’s not going to make so much of a difference. Hedge funds who invest in India, they are movers in either way and so that creates a huge volatility.”

While the two camps are putting up their own arguments, recent research shows that at present as well as in the long term there are enough reserves of crude oil in the world. The World Crude Oil Reserves have risen to 1.3 trillion barrels, more than double in last twenty years. Twenty years from now the reserves are estimated to be 2.96 trillion.

Jason Feer, VP & Singapore Bureau Chief of Argus Media, defends the research and says that there is a possibility that one could see prices going substantially lower because of enough supply in the market and slowdown of US economy which will soften the oil demand.

“On the fundamental side there is plenty of crude oil in the markets these days. The Middle Eastern producers really can’t sell every barrel and certainly over the past couple of years we have seen new production coming on stream at a time when higher prices have appeared to push down growth in demand. So there is a possibility that one could see prices going substantially lower. We are also seeing a slowing of growth in the US economy. That has got people hopeful that growth in oil demand will soften somewhat. So on the fundamental side I could see prices continuing to dip," concludes Feer.

By-Piyu Sen