RIYADH, Oct 11: Global financial markets are in turmoil. The talk of fear, panic, and meltdown is all around. With worst type of recession just round the corner, question marks about the future of global crude markets seem real.

Downward price spiral has set in and the question remains: where the crude markets are heading to? From an all time high of $147 a barrel in July, most pundits now agree the prices are in for a sustained downward slide.

Deutsche Bank recently reduced its fourth-quarter 2008 and first-quarter 2009 WTI price forecasts to $85 bbl. The price is forecast to average $90 bbl in the second quarter of 2009.

Like gold the oil price is trading rich relative to the US dollar, with the current euro dollar rate suggesting an oil price nearer $80 bbl,” the bank’s report projected.

Over the last two years, 85 per cent of the movement in the West Texas Intermediate oil price can be explained by shifts in the value of the dollar, the report added.

The bank underlined that the $50 bbl price levels suggested by some other analysts are quite feasible. Merrill Lynch also added its voice to the rhetoric that prices could sink to $50 a barrel in the unlikely event of the whole world slumping into recession.

With energy demand expected to slow further in the coming months, brokerage Merrill Lynch also reduced its forecast for average West Texas Intermediate and Brent prices in 2009 to $90 a barrel, from $107. However, the report cautions that since the commodity super-cycle were still not over, crude prices could bounce back to $150 a barrel as the economy recovers and the cost of money increases, the report added.

Right now oil demand is falling the most in the United States and Europe, while demand growth is also slowing in China, the major consumption driver. In Brazil and Russia, car sales have fallen. The US oil demand in July fell to the lowest level for the month in 11 years, with consumption 736,000 barrels per day less than previously estimated, according to the U.S. Energy Information Administration.

Supply from the Organisation of the Petroleum Exporting Countries fell to 32.39 million barrels per day in September from 32.70 million bpd in August, the Opec officials and analysts said.

The issue of demand security is turning out to be crucial in the overall balance. Are consumers ready to provide demand security?

That is a big puzzle in the energy jigsaw and it’s now the consuming world’s turn to make the right move so as to ensure a stable future of this civilisation - that continues to remain crude driven.