Despite the ups and down,and after reading different financial newspapers,with what's happening in the middle east and the problems that may come very quickly between Iran vs Saudi Arabia,and what some people are saying OIL above 80 bucks US, Oil will blow past $80 a barrel in 2016 combined with the higher interest rates in the US,will this cause the rates in Australia to start to climb again..
I didnt read the article. However, I would be very suprised if oil went back to $80US this year. You are talking about a 100% upswing from current prices. And I think they will go lower before they move back up again. The dynamics of production and the market wont allow for that level of stregthening this year. From what I know today I think $60 by year end would be optimistic. We are looking at an extended period of 'lower' oil prices. Just swings and roundabouts. Blacky
I'm guessing 50-60 by yrs end. The Saudi-iran is temporary. Wont be much more than short term tensions. The best bet for oil to really shoot up and stay there, global growth will have to increase ( demand increases) and the current level of production will have to stay the same or decrease.
Agreed. I think $60 would be the top end of the range. Global deman isnt going to vary dramatically. Maybe a slight increase due to the lower costs for fuel, but in general fuel cost only impacts on domestic use, which isnt a significant user overall. Its not until sustained lower costs are passed onto end users that the impact is seen, and that is a longer timeframe than 12months. Supply will start to fall. The expensive oil producers wont sustain losses into the long term. However, shutting down production isnt cheap, easy or quick. Marginal producers are better off 'hanging on' and hoping prices come back, rather than shutting in wells. Most major (non-producing) projects have either been mothballed, cancelled or delayed. This doesnt impact todays production, nor 2016 production. It impacts what would have been produced in 3years, 5years or 7years. So the lower production isnt going to kick in this year. The only impact to supply would be if the Saudi's started slowing production, but they are not keen to do this. They are able to push expensive producers out of the market by driving the prices lower, then when wells are shut in, projects delayed and supply delayed - they will slow production and drive the prices back up, and turn their taps back on - reaping the high prices while no one else is able to produce. I cant remember exactally but Saudi production costs are under $5/barrel. At current prices (+/-$40/barrel) about 50% of world oil production is unprofitable. Blacky
Dunno - as will pay what has to be paid at the bowser ... but enjoying the local price war atm ... paid $01.9/litre to fill up yesterday
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