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Page added on December 3, 2016
Oil to Top Out at $60 a Barrel
For a moment last week, it seemed as if the bad old days, when the once-mighty Organization of Petroleum Exporting Countries enjoyed dominance over the oil market, had returned.
On Wednesday, OPEC announced that its members had agreed to a larger-than-expected production cut, its first reduction in eight years. The 14-nation cartel also announced that Russia, a nonmember, would cut output, too. In response, West Texas Intermediate crude traded on the New York Mercantile Exchange jumped to $51.06 by Thursday, up from Tuesday’s close of $45.23.
The cut is likely to make some difference, says Citigroup senior energy analyst Eric Lee, but the price was already likely to move higher. In fact, a rise above $50 on WTI is consistent with Barron’s outlook in its last follow-up on oil, on Feb. 6. Look for crude to stay above $50 a barrel through the first half of next year, then climb to $60 by the second half.
Barron’s record on the oil market has been quite respectable, beginning with the call in a March 2014 cover story for $75, when crude was trading above $100 (“Here Comes $75 Oil,” March 29, 2014), and with the follow-up later that year predicting $35, when the price was above $60 (“The Case for $35 a Barrel Oil,” Dec. 4, 2014).
Soon after, Barron’s lowered its target even further. In a Feb. 6 follow-up, when the price was above $30, Barron’s thought crude “would go as low as $20 a barrel, before vaulting to the mid-$50s by year-end.” The $20 target proved too low; the price touched a low of $26 on Feb. 11, before gradually recovering to just over $50 last week.
According to Citi’s Lee—part of the research team whose insights we have cited since the March 2014 story—OPEC’s announced production cut of 1.2 million barrels a day from an official production level of 33.6 million is likely to be honored in the breach.
Among other factors, revenue-starved members, such as Nigeria and Venezuela, will be tempted to exceed their quotas. And while the cuts are scheduled to commence in early January and continue for six months, it’s always possible for members to find reason to delay. In all, Lee believes, the cut will end up being about 600,000 barrels, after all noncompliance is factored in.
Russia’s participation—a promised reduction of 300,000 barrels a day—is questionable, since the Russian economy also greatly depends on oil revenue. OPEC and non-OPEC nations, including Russia, will meet on Dec. 9, when these matters will be worked out. Whether the market will move on that news remains to be seen.
Prices below $50 have made it unprofitable for marginal suppliers to operate, especially shale producers in the U.S. But if, as expected, prices gradually climb to $60 in 2017 on tightening supply, the shale producers will begin to return, bringing prices below $60 by 2018.
As noted in our first bearish story predicting $75 oil, just when the myth of “peak” oil supplies was enjoying wide acceptance, the world discovered a trillion extra barrels—the equivalent of three decades’ worth of extra supply—with a third of it coming from deep water, a third from oil sands, and a third from shale. Even demand has come under pressure. For the first time in its 150-year history, the internal-combustion engine can run on alternative fuels, including cheap liquefied natural gas.
The dream of U.S. independence from foreign sources of oil probably will not be realized, even if the incoming president makes more sources of domestic recovery available. But North American independence has become a reality, now that surpluses from Canada and Mexico more than cover deficits in the U.S.
Double-digit prices for crude oil are here to stay. But $100 crude is likely gone for good, as is OPEC’s dominance of the oil market.
— Gene Epstein
21 Comments on "Oil to Top Out at $60 a Barrel"
Cloggie on Sat, 3rd Dec 2016 8:15 am
In Saudi-Arabia they are opening the best bottle of wine from their wine stock.
Oh wait…
In Russia, where they do drink, in the past more than was good for them, this is good news.
This is also good news for the panel and turbine producers.
But $100 crude is likely gone for good, as is OPEC’s dominance of the oil market.
Sure mr Epstein.
9% rise on Wednesday.
penury on Sat, 3rd Dec 2016 10:12 am
Another day, another prediction, waste time reading? or run down and invest money? If all the experts who actually knew anything were on one side of the boat and all the “experts” writing columns were on the other the boat would flip and sink from the overload.
Sissyfuss on Sat, 3rd Dec 2016 10:28 am
Cloggenfuerher, give me your Euro-centric estimation of Dame Merkels chances for reelection. I surmise it to be less than 50-50.
onlooker on Sat, 3rd Dec 2016 10:29 am
Yep we live in times of deceit, denial and ignorance. Good thing though or this baby would have already blown from mass panic.
rockman on Sat, 3rd Dec 2016 11:54 am
p – Always amazing to see price predictions based on expectations of production rates when we have a 100+ year history of economic vitality having dominant control over both price and production levels. The latest boom/bust cycle is a good example.
Apneaman on Sat, 3rd Dec 2016 12:29 pm
“Cloggenfuerher” lmao.
Cloggenfuerher has that 9% rise resulted in $100 a barrel oil? No.
Why do you say Russians drank in the past more than was good for them when alcoholism is still a huge and destructive social issue for them today? They have a centuries long problems from it and the rulers, have, at different times both promoted alcohol consumption and tried to curb it. It’s likely as bad as a ever and they have all the illegal drugs problems too.
Cloggie on Sat, 3rd Dec 2016 1:30 pm
http://www.jeffersoninst.org/blog/943
One link in many to verify that Russian alcohol consumption is declining spectacularly.
Reason: these folks stopt being stinking commie leftist globalists and instead began to mind their own business, always a good idea.
Currently their is only one country in the northern hemisphere where white males have a declining health and life expectancy and that’s the neighbourhood made unsafe by comrade Friday, with a mental health displaying remarkeble similarities with the people of Sverdlovsk-East or Tarkovsky’s movie Stalker.
Cloggie on Sat, 3rd Dec 2016 1:53 pm
America’s mental and physical health will improve and all sorts of addictions like those to medicines vanish if European-Americans will have the feeling they have a future, other than drowning in the third world.
#GlobalismSucks
Apneaman on Sat, 3rd Dec 2016 2:50 pm
Cloggenfuerher, cherry picking and lying again.
DECISIVE EFFORTS TO COMBAT ILLEGAL SECTOR MEET WITH FAILURE
“An established anti-alcohol policy is becoming crucial for legal alcohol in Russia. The previously announced government legislation to diminish consumption of strong alcohol continued to hamper the performance of legal alcoholic drinks. Numerous legislative restrictions and extremely high excise taxes substantially exacerbated the situation, making counterfeit products very attractive to and popular amongst domestic consumers. In 2015, Russians substantially suffered from an increased number of poisoning incidents from illegal products.”
http://www.euromonitor.com/alcoholic-drinks-in-russia/report
Russia is quite literally drinking itself to death
“The result? Russians live some of the shortest lives in any large economy. Life expectancy for a Russian man was roughly 65 years in 2012, compared to 76 years for the US and 74 for China.
Part of the reason is cultural. Hard drinking has long been a Russian habit. A paper published in 2013 found that relatively high levels of alcohol-related deaths can be found in Russian data going back to the late 19th century.”
http://qz.com/403307/russia-is-quite-literally-drinking-itself-to-death/
The World: Life Expectancy – Male (2016)
#14th – Canada
#17th – Netherlands
#47th – United States of America
#190th – Russia
http://www.geoba.se/population.php?pc=world&type=17
Old dutch needs to cherry pick and lie and use cheap rhetorical tricks to attempt to make his revolutionary narrative appear as a reality. I had predicted this is what the trumpateeres would do after he betrays them. Just spin it to fit their little emotionally satisfying story. No different than your average young earth creationists. Strongman Putin and glorifying Russia as some make believe model nation are also part of clogs and his alt right retard buddies narrative. I have nothing against the Russian people and as far as Putin goes he is just one more power hungry alpha male. I have no problem admitting that under him that many average Russians lives have improved, but don’t kid yourself that Russia is a model nation and many there are still suffering and living in poverty and they have a shit load of alchol and drugs problems. Putin is a real strong man and did not get where he is by being warmNfuzzy. There are a trail of bodies behind him.
Davy on Sat, 3rd Dec 2016 2:59 pm
A little misleading Ape with the comparisons. Canada and or the Netherlands could be a state of either Russia or the US. Who cares about life expectancy anymore anyway you know with extinction around the corner.
Apneaman on Sat, 3rd Dec 2016 3:19 pm
Davy how is it misleading since it was a response to cloggie’s assertion that Canada is “the one country” “where white males have a declining health and life expectancy”
Here is his full quote.
“Currently their is only one country in the northern hemisphere where white males have a declining health and life expectancy and that’s the neighbourhood made unsafe by comrade Friday”
I know extinction is around the corner, but why would I let that stop me from
fucking with peopledebating, which I enjoy?All these if: peak oil or collapse or extinction or whatever is going to happen then why___________? are non sequiturs.
Why ever get out of bed since one day you will die?
Davy on Sat, 3rd Dec 2016 3:33 pm
It’s stimulating to grab pussy in the shadows of extinction, lol
Cloggie on Sat, 3rd Dec 2016 3:47 pm
Davy how is it misleading since it was a response to cloggie’s assertion that Canada is “the one country” “where white males have a declining health and life expectancy”
Can’t remember having referred to “Canada”, I was referring to “neighborhood”, dummy (North-America). Haven’t the faintest idea about statistical data concerning Canada, other than huge electricity consumption and rapid greening thanks to CO2.
Are we being sloppy readers again, are we?
Regarding US male life expectancy, I was talking about this kind of data:
http://www.wsj.com/articles/life-expectancy-for-white-americans-declines-1461124861
Since the fall of communism, Russian life expectancy grew; not as much as in the rest of the world, but the situation improved since the end of the communist nightmare:
https://themoscowtimes.com/news/why-is-russias-growth-in-life-expectancy-slowing-49224
Oh, and can I please have at least my insults spelled properly? It is
Cloggenfuehrer
not
Cloggenfuerher.
#HaveToTellHimEverything
And when I give you orders, you are supposed to respond with…
“Jawohl mein Cloggenfuehrer”
or
“Sofort mein Cloggenfuehrer”
… while clacking with your heels, entirely in line with the new Zeitgeist.
Cloggie on Sat, 3rd Dec 2016 4:00 pm
Cloggenfuerher, cherry picking and lying again.
Comrade Friday, I wasn’t lying, I was merely saying that Russian alcohol consumption is declining significantly since the end of the USSR. I had no opinions about the success of current government anti-alcohol-campaigns.
Russia drinking itself to death? How come they are kicking ass in Syria and winning the Olympic medal table in Sotchi?
Mixing everything up, right, just like with your climate change hysteria. Floodings are normal on this planet, but our forum hysteric is immediately framing any such isolated event into his doomer world view.
Apneaman on Sat, 3rd Dec 2016 5:41 pm
old dutch lying and trying to weaseal out his horseshit again.
Again here is his quote
“Currently their is only one country in the northern hemisphere where white males have a declining health and life expectancy and that’s the neighbourhood made unsafe by comrade Friday, with a mental health displaying remarkeble similarities with the people of Sverdlovsk-East or Tarkovsky’s movie Stalker.”
Bullshitter you are the one who used the word “country”. Going to deny that? “One country” in fact, so your next lie that you meant “(North-America)”is exposed as well unless you do not know the difference between a single country and a continent. Which one is it? Confused or lying again?
As for misspelling you spelled “remarkeble” wrong and confused their with there you little scum fuck grammar Nazi.
Cloggie on Sat, 3rd Dec 2016 6:27 pm
“Currently their is only one country in the northern hemisphere where white males have a declining health and life expectancy and that’s the neighbourhood made unsafe by comrade Friday
That country is USA, never said I meant Canada. Everybody knows that it is the US where life expectancy is declining, so when I say one country, I obviously mean the US.
Vancouver is a stone throw away from the US, hence I mentioned neighborhood.
I knew precisely what I said when I said it and formulated it such that I could link depressed little you to a neighborhood with a declining life expectancy. Capiche?
makati1 on Sat, 3rd Dec 2016 6:28 pm
Life expectancy by country:
Monaco – 89 years
Singapore, Japan, Macao – 85 years
Iceland, Hong Kong, Switzerland – 83 years
Israel, S. Korea, Sweden, Canada – 82 years
Netherlands, New Zealand, Germany – 81 years
Taiwan, United States, Denmark – 80 years
Cuba, Chile, Panama, Costa Rica – 79 years
China, Malaysia, Thailand, Mexico – 75 years
…
Russia, Philippines, India – 69 years
…
Chad – 50 years.
224 countries with 2016 est. lifespans from the CIA World Factbook.
These are just averages. My partner here has two aunts in their 80s and a great grand mother who turned 100 last year. Health is more important than age anyway.
As some said, what does age matter if there will be no one here to care in another 30 – 40 years?
Apneaman on Sat, 3rd Dec 2016 6:41 pm
Clogged, is trying to plug a dozen holes with only ten fingers. Neither me or anyone else is buying it. You’re out of your league with me old man.
Cloggie on Sat, 3rd Dec 2016 8:45 pm
You’re out of your league with me old man.
Got any other references other than you and your mom?
Sissyfuss on Sat, 3rd Dec 2016 10:34 pm
Cloggenfuehrer, twas I that misspelled your new appellative but you did not respond to my inquiry. What is Dame Merkel’s chances for reelection. Less than 50-50?
makati1 on Sat, 3rd Dec 2016 11:01 pm
Sissy, I would give the old dyke a 10% chance of winning. At least, I hope so. Time the EU disintegrates and takes NATO with it.