Will oil price go up to $100/barrel?

Discussion in 'Business & Economics' started by Saint, Dec 7, 2016.

  1. joepistole Deacon Blues Valued Senior Member

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    Yes, the US still imports oil. Some have predicted the US will be energy independent by 2020.

    Russia and Iran didn't want to cut production and still don't. They want everyone else to cut production. But under the current arrangement Russia will cut 300,000 barrels a day. Iran is exempted from production cuts owing to its history of being sanctioned.

    Russia is very desperate. The question remains if Russia will actually cut back its production? I have my doubts. Russia doesn't have a very good record of honoring its promises. But if by agreeing to production cut backs it gets others to cut back on their production it advantages Russia with higher prices for its oil. We will have to see if Russia lives up to its production cutback commitment or not.

    Venezuela is a basket case. It has mismanaged virtually everything. It's one of the leading oil producers. But it hasn't made the investments necessary to keep its oil business healthy. It's oil industry is in decline due to neglect and mismanagement.
     
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  3. Saint Valued Senior Member

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    Theoretically, will oil be depleted one day?

    I read that Israel has discovered a lot of natural gas and oil in Golan Heights, is it true?
    Will Israel be oil-independent and even an exporter one day?
     
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  5. sculptor Valued Senior Member

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    Yes, Oil is most likely a finite resource.

    as/re Golan heights:
    Technically, that land belongs to Syria.
    There is some speculation that that is the real reason we tried to destroy Syria.
    The UN keeps demanding that Israel withdraw from the Golan. If we had succeeded in destroying Syria, the UN resolutions would have become moot.
     
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  7. joepistole Deacon Blues Valued Senior Member

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    Except, "we" meaning the US didn't try to destroy Syria. Unfortunately for you my friend facts still matter. Not everyone, thank God, is a Republican.
     
  8. joepistole Deacon Blues Valued Senior Member

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    Theoretically,perhaps. But there are huge proven reserves. As our technology expands, more and more oil production becomes possible. So will oil be depleted someday? Maybe, but it will be a long time into the future. I'm talking eons. It use to be oil, coal, and water were the only energy games in town. But with new technologies and global climate change, other sources of energy are becoming cheaper, cleaner, and more efficient. Those trends are largely responsible for the demise of the coal industry within the United States. The United States has huge coal reserves. Coal has become too expensive. It cannot compete with natural gas, and the United States has huge reserves of natural gas.

    Yes there has been a large oil and natural gas discovery in the Golan Heights. But the Golan Heights is considered occupied territory by most nations and in the view of the international community Israel has no claim to those oil reserves. So digging up that oil and gas is fraught with political problems. If Israel develops wells in the region it will likely take some time. It has to deal with the political issues, dig the wells, and lay down pipelines and develop ports to export the oil and natural gas. All of that takes time and a considerable investment.
     
  9. Saint Valued Senior Member

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    If the FEB raise interest rate a few more times in 2017, what will happen to oil price?
     
  10. joepistole Deacon Blues Valued Senior Member

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    It would have the effect of slowing the economy and therefore demand for oil, but it probably will not be significant else the Fed wouldn't do it. This all depends on what Congress does next year. But right now, the best minds from the best institutions, e.g. Wells Fargo, Goldman Sachs, etc., think oil prices will moderate around $55/bbl, next year, and they expect there will be at least 3 Fed rate increases next year. If oil prices hit $60/bbl it will release a floodgate of production. It would probably break OPEC as all the non-OPEC producers would open the production floodgates.
     
  11. sculptor Valued Senior Member

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    3,677
    I think you mean the FED = The Federal Reserve System

    Usually, when the fed raises rates, the dollar goes up, and as long as oil is traded in us dollars, the price of oil then goes down.
    However, there is also supply and demand, and as we burn more to heat our homes, we use more, which puts pressure on the demand side, and prices go up.

    (it's complicated)
    Then if there is strife in the oil producing regions, fear of supply interruption makes the price go up.

    Then, market speculation comes into play.

    My best gauge so far is cold calls. If I get "cold calls" trying to sell me oil futures, the price usually goes down. The same for gold: If I get cold calls trying to sell me gold, the price has usually peaked and will be falling.

    So, we have supply and demand, and the strength of the dollar, and market speculation all influencing the price of oil.
     
  12. Saint Valued Senior Member

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    3,125
    Trump wants more manufacturing to be pulled back to US,
    but strong US Dollar will hurt your export because your goods will be more expensive.
    Raising interest rate will push US dollar up further,
    and US government wants the country to produce more goods for export,
    isn't it a dilemma?
     
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  13. joepistole Deacon Blues Valued Senior Member

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    It is. You nailed it. It makes American produced goods and services more expensive and less competitive, and it puts Americans out of work, because the demand for those goods and services cannot support the costs. Trump thinks or says he can create a wall which will isolate the US from the world. Trump is doing a Putin. We can all see how well that has worked out for Putin. Putin's economy is in a prolonged multiyear recession.

    What Trump has said is nothing but buffoonery. Unfortunately, buffoonery works with the American right wing which Trump leads. Trump has a long habit of saying silly and contradictory things, but it works with his base of supporters, i.e. Republicans. Trump's supporters are mostly lesser educated folks. They don't see the contradictions, and even if they could, I don't think the contradictions would matter to them.
     
    Last edited: Dec 20, 2016
  14. sculptor Valued Senior Member

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    3,677
    Yes, a dilemma.

    It seems that most of the jobs lost to lower cost labor can be replaced by robots. So, even if those jobs are repatriated, humans won't be doing them.
    It has been estimated that almost 50% of current jobs in the usa can be done better by robots(technology). So many of those jobs will most likely also be gone in a generation.
    We will then have a labor surplus. One potential cure, could be a shorter workweek. but, then, we run into the problem of a "living wage".

    Long ago, Henry Ford raised the wages in his factories, reasoning that if the workers made more, then they could afford to buy his cars.
     
  15. Saint Valued Senior Member

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    3,125
    Malaysia's Petronas also pledged to cut oil output.
    Why so many non-Opec countries also want to follow the cut?
    In a short term, will higher oil price do anything good to world's economy?
     
  16. Saint Valued Senior Member

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    3,125
    Higher US dollar will make your imported goods cheaper,
    and China's goods will be more attractive to buy.
    But Trump said he will impose tariff on China's goods.
    Will this work to make US-made goods competitive with China's goods?

    One coin has two sides, strong dollar will be good or bad to US's economy after weight and balance?
     
    Last edited: Dec 21, 2016
  17. joepistole Deacon Blues Valued Senior Member

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    Because they are desperate for higher prices. Rather than selling more oil for the same amount or less money, they'd rather sell less oil for more money. In the short term and long-term higher oil prices will slow the global economy. But it won't affect all economies the same. It will slow the economies which consume a lot of oil. But higher oil prices may stimulate the economies of oil exporting states. On the whole it will slow the global economy.
     
  18. joepistole Deacon Blues Valued Senior Member

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    21,952
    Well, that's the intent. But making it a reality is a bit more problematic. Higher prices for foreign produced goods will also reduce demand for those goods. New factories would have to be built. People would need to be hired and trained. And where would the capital come from to build these factories? The risk is high. Trump's tariffs can vanish as quickly as he can impose them. I don't think there would be too many investors who would step up to the plate.

    There is no way around the fact that labor from less developed states is a lot cheaper. The US must compete on things other than labor and it has. Trump wants to take the US back to a time when the US was the only industrial power owing to WW II. Those days are gone.

    Yes, having a strong currency is both good and bad. A stronger dollar makes it easier for the US to buy foreign produced goods and services, and it makes it easy to borrow and spend money, but it makes domestically produced goods and services more expensive to foreigners. So the answer to your question is it depends.
     
  19. Saint Valued Senior Member

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    3,125
    Some said oil price will shoot up to 75 this year, possible or not?
     
  20. billvon Valued Senior Member

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    Unlikely. It will probably top out around $70, where most tight oil is recoverable.
     
  21. joepistole Deacon Blues Valued Senior Member

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    It's very unlikely. Perhaps an asteroid could hit Cushing, Oklahoma (i.e. the bulk of US commercial reserves) or the US strategic reserves or some other large oil reserve, but that's' a very unlikely event. I think it will be a struggle to hit $60 this year. The reason prices have risen is because OPEC and non-OPEC producers have agreed to reduce production. This alliance is very fragile and the incentives to cheat are large, and not all oil producers have signed on to it. The US is not a party to this agreement and the US is one of the world's largest oil producers. In fact, the US is the world's third largest oil producer.

    Oil production in the US is now profitable at $45 a barrel, and more and more US production will come on line this year, because oil production is profitable, and US oil producers are not a party to this agreement. I own a financial interest in the Prudhoe Bay oil reserves. My brother owns oil mineral rights which he has leased to an oil driller. So he too has an interest in seeing oil prices move higher this year. But I just don't see oil topping $60 this year. Personally, it would be nice for me, but I don't think its coming. I think oil prices will average in the mid 50's this year.
     
  22. Russ_Watters Not a Trump supporter... Valued Senior Member

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    Perhaps in the short to near term. There is inertia in the market in that it will take a while to ramp production back up. So if OPEC does a good job (unlikely) they could cause a short spike until the fracked oil ramps back up.
     
  23. youreyes amorphous ocean Valued Senior Member

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    2,820
    Its not a question of will, but a question of when. Right now would be a great time to invest in BNO, but...one would have to wait 2 years for it to return back to 40 USD from current 15 USD per stock, which of course depends on price per barrel worldwide. With recent slashes by numerous countries in oil production, this will happen.
     

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