How undervalued is oil?

Discussion in 'Commodities Forum' started by Hedonologist, Nov 17, 2015.

  1. Hedonologist

    Hedonologist Well-Known Member

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    Given how the Middle East has not been this unstable in a while, and The general stability of the world is so low, how come Oil is yet again close to 7 years lows?

    Peak oil scaremongering once suggested by now we'd be in the $200-$250 range, not $40-45!
     
  2. crimsonghost747

    crimsonghost747 Senior Investor

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    short answer: because of supply and demand.
    There is too much oil being pumped out currently... the situation will fix itself at some point though.
     
  3. Corzhens

    Corzhens Senior Investor

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    What a coincidence. Today the price of gasoline is cut by a peso per liter that will now cost 43 pesos or so in pump prices. Last year it was on a high of 54 pesos per liter. So you can imagine the low value of oil here that reflects the prices in the international market. Our department of energy explained that oil has become cheaper because of the lowering of prices in the world market caused by the over production of some oil-producing countries. I wonder why those countries continue to over-produce when it clearly affects the prices.
     
  4. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Agree with this.
     
  5. Rainman

    Rainman Senior Investor

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    I think the prices will remain low for a really long time because the monopoly the Middle East oil produces enjoyed is long gone. And there's also another problem. OPEC's unity is gone too.

    I'm certain though that should the instability in Syria and Iraq spread then we'll see oil prices shoot up.
     
  6. crimsonghost747

    crimsonghost747 Senior Investor

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    Unity in OPEC is certainly gone. But they still need the cash from oil to run their countries, quite a few of them will be in trouble if the current oil prices remain in effect for years. So, at some point, at least some of the countries will agree to try to drive up the prices a little.
     

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