History suggests oil prices will rally

LONDON - The steepest plunge in crude prices on record may be setting up oil investors for a rally this year, if history is any guide.

The so-called forward curve of futures contracts traded suggests that oil will rise 30 percent, to $60.29 a barrel, by December. The curve looks almost the same as 10 years ago, after Russia's default and the collapse of the Long-Term Capital Management LP hedge fund raised concerns a global slowdown would cut energy demand. Crude prices fell 25 percent in late 1998. The Organization of Petroleum Exporting Countries cut production 6.9 percent, and prices more than doubled in 1999. Now, OPEC is pledging a 9 percent cut; 28 of 30 analysts tracked by Bloomberg forecast a median price of $70 in the fourth quarter.