Oil spikes, GM craters, Dow slumps

GM hit its lowest price in more than $50 years and oil crossed the $140/bbl mark, all combining to drive the Dow to a 2008 low, below 11,500.

Oil surged on talk of Libyan production cutbacks and talk by OPEC that prices could break $150. While other news has played up the talk of Libyan cutbacks due to possible terrorism-related sanctions, to me, the OPEC talk was the big thing.

Chakib Khelil, president of the Organization of the Petroleum Exporting Countries, said he believes oil prices could rise to between $150 and $170 a barrel this summer.

Remember, this comes directly on the heels of a pledged production increase by Saudi Arabia.

Khelil cited the strength of the Euro and weakness of the dollar, among other things, but the Algerian energy minister may also have been doing some muscle-flexing against Riyadh:

“The Saudis go out of their way to have this specific meeting outside the OPEC frameworks, and if you’re the OPEC president, you want to be important, so you come out of it and say $150 to $170,” said Roger Read, an analyst at Natixis Bleichroeder in Houston. “He’s trying to prove he matters and OPEC matters and the Saudis don't make all the decisions.”

If Read’s right, Khelil accomplished what he intended.

Meanwhile, GM stock sagged to a point not seen since 1955. It’s so bad that Goldman Sachs issued an unusual “sell” warning.

Elsewhere this week, I’ve heard some analysts claim that GM may burn through almost all of it’s capital by the end of 2010. So, if the Volt fizzles, it’s bankruptcy?

Seriously, who would be dumb enough to lend GM major amounts of money right now?

To complete the trifecta, Citigroup hit a 10-year low. The usual for the financial sector — mortgage derivates exposure.