Very scary chart for anyone holding energy related instruments in the short run. I've heard several predictions in the past week or so of sub-$50 crude oil within the next year. Of course, that is barring any new disruptions in the Middle East, Nigeria, Venezuela, the Gulf of Mexico, . . . But, I can't take positions hoping for chaos when the market is clearly settling back into its real value base. If crude does fall back into the mid-40's or lower, it could be a very good time to add to long-term buy and hold positions.
I find it very hard to believe Oil prices in the 40s are sustainable for any length of time. Demand is just too strong in China, India and the US. A continued drop in oil will have a coinciding bump UP in demand as people drive more and the economies benefit.
Also, while there is "plenty of oil" the easy to get oil is what is running out. For example, the oil found in the Gulf of Mexico requires an oil price in the 50s minimum, and maybe even the 60s for it to be worth getting. Why? It is going to cast a FORTUNE to get it out. Same with the Canadian Oil Sands....its not worth it if oil prices drop.
Also there is no real information on how much oil the Saudis REALLY have. We know what they SAY the have...but again, even the oil they have left will take more tech to get.
Without any world supply disruptions, wars and the like, I would guess real value including enough profit to get more supply would be high 50s. This terror premium people keep talking about IMO is the money between 60 and 80. I don't think below 60 is a terror premium...but we may be about to find out.