Burggraben: Oil is going to $100 !
Are you ready for triple digit oil prices?
A new oil order?
We are in a boom bust cycle, with no end in sight, rather than a “new oil order” and shale oil will contribute to, not dampen it...
Consensus forecasts assume Brent oil prices to be anchored around $55 (+/-5) a barrel until 2020 due to the (endless) supply of the fast-cycle barrel from shale rock in North America, making shale the new “marginal” and hence price-setting barrel or “swing producer”. In addition, the market seems to trade of an expectation of elevated year-end commercial oil and product inventory levels (when compared to their 5-year average), possibly from an expectation that OPEC will return to a policy of competing for market share and thus flooding the market again at year-end and once their production cut agreement expires.
Lastly, the media has created a hype about the EV revolution which in some case led to the interpretation of “stranded resources” which will soon lead producers worldwide to compete for a diminishing number of clients. In combination, these opinions continue suppressing sentiment for oil related investments in financial markets up until today. But a quick glance at the oil price, hovering close to $70 a barrel in mid-January, suggests earlier predictions that the shale era would usher in a period of “lower for longer” prices are starting to look premature.
“Dominance” by one supply region of the100 million barrel a day global oil market remains, in our view, elusive and $55 is no more likely to be a “new normal” than $100 was thought to be five years ago.
Let us explain...
The presentation compiled by Buggraben is one of the most elaborate and comprehensive oil slide decks ever created. We think this slide deck will help answer most of the questions you have on the oil markets.
Editor's Note: This commentary was originally published by HFIR's Blog, on Seeking Alpha, 04/28/2018. Petroleumworld reprint this article in the interest of our readers and does not necessarily reflect the opinion of Petroleumworld and its owners.
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Petroleumworld News 05/07/18
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