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Page added on June 24, 2017
Will oil prices head to $30 or $60?
Record oil stored in tankers. Market distortion by money managers. Surging production in Libya and Nigeria. A backlog of untapped oil wells in West Texas.
The oil market’s bulls and bears both have a lot to chew on these days, as forecasters offer dueling narratives about what’s going on with crude prices.
On one side, Ed Morse, global head of commodities research at Citigroup, believes the price has become distorted by financial flows into the oil market, and prices could rise toward $60 a barrel by year-end as OPEC’s oil production cuts translate into declines in worldwide stockpiles.
He said the net length of managed money – a measure of bets that crude will rise – climbed to a record 920 million barrels in early March, up from 400 million barrels last summer. That figure has since dropped toward low levels last seen in 2011, and bets against crude have surged as a bearish tone dominates the market.
“The market remains skeptical. They remain skeptical because they want to still see whether there’s going to be compliance” with OPEC’s production cuts, Morse said. “They remain skeptical because Libya and Nigeria have raised output.”
“But underneath that, market fundamentals are incredibly strong,” he added, noting global demand growth of 1.3 million barrels a day and optimistic forecasts of worldwide economic growth.
The International Energy Agency, a Paris group that consults energy importers, forecasts that oil demand will overtake global production by 500,000 barrels a day in the second quarter, entering the largest market deficit since early 2014.
“If OPEC were to continue to maintain the same production discipline it has demonstrated so far, we can expect stock draws to accelerate as 2017 progresses,” said Neil Atkinson, head of the oil markets division at the IEA. So far, though, stocks in developed countries continued to increase in April, Atkinson acknowledged.
On the other side of the debate, analysts say prices have fallen into a bear market that will push oil into the $30-a-barrel range. U.S. oil prices have plunged 20.6 percent from a February peak of $54.45 a barrel to $43.01 a barrel Friday.
One warning sign came last week when Kpler, a French company that tracks tankers, said floating oil storage climbed to a record 111.9 million barrels in June.
That was the last thing traders wanted to hear. Since floating oil storage is typically more expensive than other methods, the stocks it holds should be the last to increase and the first to shrink, said Jamie Webster, senior director at Boston Consulting Group’s Center for Energy Impact in Washington.
“The nightmare in oil prices isn’t over,” Webster said. “OPEC hasn’t cut enough to solve this problem. It’s good OPEC has cut, but they’re not the only game in town anymore.”
U.S. shale drillers still have a backlog of untapped wells they could bring online this year, although sharply lower oil prices could slow their plans.
The number of drilled but uncompleted wells has reached record levels, at 5,946, according to the Energy Department, and drillers will likely put many of those wells into production in the second half of the year, said Eric Otto, managing director at the consultancy Rapidan Group in New York
“For 2017, the die is largely cast,” he said. “The questions will be for 2018.”
20 Comments on "Will oil prices head to $30 or $60?"
bobinget on Sat, 24th Jun 2017 3:17 pm
Follow the Saudi export to US
It takes 42-48 days for the vessels to arrive to US.
TankerTracker had May middle at 657K/day and June middle at 523K/day. These are low but tells you directionally what is likely.
Saudis are serious about cutting exports as near as we can tell.
The trick seems to be, cut US imports & expand US exports.
Of course ‘new’ shale wells will ‘come on line’ this year and next. As long as one knows how Ponzi schemes function there shouldn’t be any misunderstandings.
Shale’s nature demands an never ending belt-line of new wells.
At some point, investors drop away leaving us holding the steering wheel of a 5,000 lb pick-up, all dressed up with no place to go.
http://www.livecharts.co.uk/MarketCharts/crude.php
Plantagenet on Sat, 24th Jun 2017 5:28 pm
We’re currently in an oil glut. That means there is pressure on oil prices to go down through 2017.
If we are still in a global oil glut in 2018, then there still will be oversupply and continued pressure towards lower oil prices.
Cheers!
MASTERMIND on Sat, 24th Jun 2017 6:32 pm
The Saudis have peaked and are now in decline. They are using the cuts as an excuse. To keep the world from going batshit insane.
makati1 on Sat, 24th Jun 2017 6:38 pm
Actually, who cares what the price of oil is as we get wiped out by climate change and our own greed? $30 or $60? No difference. Both will just accelerate the end of the financial world as we have known it. Bring it on!
Davy on Sat, 24th Jun 2017 8:06 pm
“Actually, who cares what the price of oil is as we get wiped out by climate change and our own greed? $30 or $60? No difference. Both will just accelerate the end of the financial world as we have known it. Bring it on!”
A stupid old man in his twilight years with no one to care for or be cared for by could give a shit about our future. Old slime balls like makati can’t stand the thought of his nearing death and others carrying on. He wants everyone to go with him early.
makati1 on Sat, 24th Jun 2017 8:36 pm
Davy, the “future” is already decided and it has nothing to do with money or oil. If you pay attention to AP’s posts, you would see that. The end is coming and you or I cannot stop it. The collapse of the ‘capitalist’ and/or ‘democratic’ systems will only be a minor bump in the road to humanities end. Mother Nature is bringing out here big guns and we have no idea what her time line is.
As for “an old man in his twilight years’ who just happens to see the real world and is not afraid to talk about it, so be it. YOU are the one in denial of what is facing you and yours, not me. I have a large family that I know will suffer, but there is nothing I can do to change that. Neither can you. Ignoring it does not make it go away or lessen the pain. I may live another 20 years. You may not. So what? You could be killed in an auto accident today. Does age make a difference? Nope. Rant on, Davy. LOL
Davy on Sat, 24th Jun 2017 9:13 pm
Hey, stupid, “the end is coming” ? I would like to know how you know the “when”? WTF does Ape man know about the “when” of the “end”. You are so far up his ass you stink. Neither of you know what is really going on. Both of you are sensationalist parroting climate doom. It is one thing to know we are in trouble but it is another thing to revel in a message of pain, suffering, and death. You spend your days blaming and claiming to be the judge and jury on who is at fault for this climate mess but the reality is you are a climate hypocrite. Wasn’t it your dumbass 2 weeks ago that took a little shopping trip to Hong Kong. Now what is that dumbass? It surely was not climate change neutral. Ape man hates people who take shopping trips to Hong Kong according the general message of his hundreds of climate change posts. What I can’t figure out is why you two are best of friends.
makati1 on Sat, 24th Jun 2017 11:10 pm
Davy, your second word (stupid) points out your immaturity and frustration that your version of the world is the one we should all believe. Timelines are not set in stone for the end of humanity or even the end of the U$, but that does not make them only a possibility and not a sure thing. You can look at the signs and know that they are both fast approaching and will not be stopped or even slowed down. Fear of the future has you in denial. Too bad. I hope you are making the best of the situation now and preparing for the one coming.
dave thompson on Sun, 25th Jun 2017 12:12 am
Lets all watch the arctic ice this year. It looks as if this will be the year that it melts away. The arctic ice will be the near term determinator.
joe on Sun, 25th Jun 2017 12:47 am
It’s all ok. Macron will save us..,,,
Vive le France, vive le EU!!!!
Davy on Sun, 25th Jun 2017 5:12 am
“Davy, your second word (stupid) points out your immaturity and frustration that your version of the world is the one we should all believe.”
Funny that because you attack people too and that is not immaturity. I think Makati you are a hypocrite and an old man that is drifting into immaturity. Once old people get to your age they start the process of turning to into children mentally. I know it is working on me too but I have 20 years to catch up with you.
makati1 on Sun, 25th Jun 2017 5:46 am
Look in the mirror, Davy. I only rebut your comments about my ……. whatever your rant of the day is. My sanity is obvious to everyone here, yours is in doubt.
Davy on Sun, 25th Jun 2017 6:01 am
“Look in the mirror, Davy. I only rebut your comments about my ……. whatever your rant of the day is. My sanity is obvious to everyone here, yours is in doubt.”
UUH, makati, where is your evidence and who gives a shit about what everyone else thinks. There are a few extremist here who you play with in your dirty little world of blame and complain. You are all hypocrites that live with lies. How does a gang of 4 or 5 make you an “everyone”? I think your problem is your mirror is broken. You are a braggart who constantly is talking himself up and that is combined with efforts at attacking others to support the narcissism. I attack you makati because you attack me. You have been doing this now daily going on 5 years. If you have any support here it is because this site is a magnet for extremist. You and your extremist buddies often reference my so called “rants” but especially in your case you are incapable of writing more than a few sentences. When confronted with 5 or 6 paragraphs then you little shame of an argument is exposed with a lack of substance. For 5 years now makati I have proven you a failure.
makati1 on Sun, 25th Jun 2017 6:58 am
You obviously ‘give a shit’. Read your own comments.
As for my sanity. Funny that there have been ZERO other posters here who have mentioned my possible ‘senility’ or used my age as a reason for my take on the situation. They may disagree, but they do it in an intelligent manor.
You have no real facts to prove that I am wrong in my assertions, so you resort to lies and innuendoes to try to make me look ‘old and decrepit’. Keep trying Davy. You only prove my point.
BTW: If you cannot get your thoughts over to others in a few sentences, you are just bloviating.
Davy on Sun, 25th Jun 2017 8:21 am
This is great makati. I was on your ignore list which was a joke to now being on your mostly commented on list. LMFAO. Makati, the people who don’t question your sanity are your friends whose judgment is suspect to begin with. There are many who don’t comment or who don’t care to comment on you in particular so don’t feel so grandiose. You have a little group of groupies who you feel special with. Otherwise you’re just a stupid old man talking yourself up and others down. You have an extremist agenda of the west absolutely bad and the east as wonderful. I do not dispute many of your facts the issue is the delivery and the “unbalanced” part of it. I fully agree the west has turned into a horrible example of decline and decay. The east is just as bad and actually worse now because of overpopulation. You are nothing but a lonely old man far from family crying out desperately for attention. Your fantasy farm is a joke and your Island refuge a mistake. You are on an Island with 100MIL people in an urban area with 20MIL facing the worst of the destructive effects of climate change. I too have my dangers. We all have dangers but the difference with you is you point out others dangers and talk like you have the fewest. You are a fake and ridiculous.
“BTW: If you cannot get your thoughts over to others in a few sentences, you are just bloviating.”
Oh, makati, if this is true you better tell your lover, AP, because his rants are as long as mine. You won’t because he is your bud spud you swap spit with daily. You always have an excuse that reflects on your inconsistencies.
MrBill44 on Sun, 25th Jun 2017 9:45 am
Davy, you need to be more civil in your comments. Perhaps you are sipping too much local “Old Stone Hill” product.
Davy on Sun, 25th Jun 2017 10:31 am
Mr bill give me a break. If attacked I attack back. Do a little research on the nature battle. People like you that choose sides show their cards. Who are you and what do you believe in? This is your first time here so “a” are you a stupid sock puppet “b” are you one of them? If you say who you are and what you stand for I will give you the time of day otherwise go screw yourself. I have not seen your dumbass tell ape man to be more civil and if you did he would tell you to stick where the sun don’t shine.
onlooker on Sun, 25th Jun 2017 10:50 am
It is headed to 30$ and below as the Oil Industry and General Economy are caught in a negative feedback loop whereby as either gets weaker, it weakens the other and vice-versa and slowly but surely both are dragged down to the nadir.
Anonymous on Sun, 25th Jun 2017 3:47 pm
Strip has it headed to 44. So basically same as now.
http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html
Either 30 or 60 is possible. Someone will sell (and buy) options to hit those prices. Probably a little more likely to hit 60 than 30 (distribution is asymmetric). And both are probably within the 90% CI. But both less likely than…44.
Mr. Brill on Tue, 27th Jun 2017 6:55 pm
News is all fake. I wish I had a dollar for every prediction of melted ice caps and no more snow since 1985. It’s really getting old and tired, like failed predictions of collapse since the 1960s. Any day now . . . Sure thing.
The climate and the future in general will not be what you want it to be, no matter how hard you grit your teeth. It’s chaos with dozens of significant drivers and feedbacks in multiple directions, none predominating for long.
Get off the fake news and conspiracy theories while you still can.