Will go up slowly from this point forward.
Will oil price go up to $100/barrel?
- Thread starter Saint
- Start date
Unlikely. Tight oil is not profitable below about $60-$70.Just read a report predicting it to go down below $50.
$32 a year ago, now $48. So trend is upwards.
That's a possibility. The answer is no one really knows. Oil is down based on increased US production. It will be a balancing act. It always is. The bad news for oil bulls is American oil producers have become more efficient and lowered production costs. So based on that, and assuming OPEC does nothing else to limit supply, oil prices are headed downward. The unknown card here is demand. If demand increases owing to stronger economic growth there is a possibility oil prices will rise modestly or stabilize. It's a coin flip. My best guess is that oil prices will trade in a range between the mid 40's and mid 50's providing the US Congress provides some fiscal stimulus as Trump has promised. That's the great unknown at this point. Do we get a multi-trillion dollar fiscal stimulus package from Congress or not. If we do, it's bullish for oil prices. If we don't, it's bearish.
Shale oil is "light and sweet", those are good traits which make the oil easy to refine. Yes, RON 98 can be refined from shale oil.
By contaminants, I think you mean sulfur. Low sulfur oils are regarded as sweet. Attached is a reference listing producers of sweet oil.
https://en.wikipedia.org/wiki/Sweet_crude_oil
Generally no, quite the opposite. Shale oil is the dirtiest and has the lowest EROI.
exchemist
Valued Senior Member
From what I read it is mainly due to weaker than expected economic growth in China, plus the effects of shale oil - and possibly other sources, producing more than the market needs. But you can read about this for yourself easily enough in oil market publications. These short term swings are always going on.
As Exchemist said, there is a glut of oil on the market cause by increased US oil production. If OPEC and Russia want to drive prices higher, they need to cut their production even further. It's not clear that will happen. Alternatively, the US, Europe, or China needs some serious infrastructure spending. It's not clear that will happen.
Just because Ruskies are in crisis, it doesn't follow that the rest of the world is similarly vexed comrade. Because it isn't. Economies around the globe are growing: your beloved mother Russia exempted.
By the way comrade oil has dropped seriously below fifty dollars. There is no "could" about it. It has already happened. And that's a problem for your beloved mother Putina.
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exchemist
Valued Senior Member
Broadly true - even the EU is now once more growing again at a healthy rate. But China's rate of growth is undershooting forecasts, which seems to be a factor depressing the price on the demand side.
On the supply side, I read today in the FT that US shale oil producers have taken a lot of cost out of their operation and many of them can make money with crude at $50/bbl. So this looks for the present to be a new upper limit for the crude price. Bad news indeed for Russia. From what I understand, they need a price of $>100/bbl to support their economy.
One extra demand factor that may soon need to be taken into account is the reduction of oil intensity in most economies, as renewables take off. I don't think I've ever seen this pulled out as a distinct effect on price, though some dramatic stats are available showing how the ratio of oil consumption to GDP has fallen since the 1960s - by a factor of 4, if I recall correctly.
The US doesn't export shale oil, but it does export natural gas that may come from shale oil wells. Increased US domestic oil production reduces the oil it imports, and that increases global oil supply.