As far as I know, Saudi Arabia has built enough reserves to let oil go on free fall a few months ago. When the OPEC nations met, I believe Saudi refused to react on the free fall as to avoid the errors of the 70s and lose market share against the other nations. I'm not sure about Russia's farm in Siberia but Russia is in dire straits the past few months. Much of its budget balances hinged on a specific price of oil - it did not anticipate the free fall. I'm not yet sold that oil will go over $150 a barrel any time soon - much of the free fall of the previous months was the US energy self-sufficiency borne out of shale gas exploration. Natural gas is oil's #1 threat.
The Saudis feel it too but they have cash reserves to help them through these slumps. Any country that gets into an economic chaos based on a couple months dip in one of their export materials price levels is a poorly managed country. The Saudis were prepared for this, Venezuela&Nigeria probably weren't really prepared for anything.
It was my perception that the Saudis caused it. They talked other OPEC members into continuing output to kill off the supply among fraccers in the U.S. News the other day said Iraq is increasing output not too. Not good for oil investors short-term.
Will crude oil ever hit $150? It's highly doubtful unless there's a major crisis that like a world war which many "doomsayers" predict. For those who believe oil will go up there's but one complication. Countries where oil was previously not produced have now learned that they have some black gold of their own. When they do start pumping to undercut them, the major oil producers will have to slash prices again. Yes the prices may go up steadily but they'll level off somewhere and it will be closer to $100. That's what OPEC said a few days ago. http://economictimes.indiatimes.com...ach-100/barrel-again/articleshow/47555015.cms "We have to live with the reality of market that current oil prices are fair, therefore we must accept that oil is priced at below $100."
I always love the debates over oil. There are always well-thought out theories that support the movement of the commodity in either direction. Obviously, both can't be right over the longer term. But it's equally as educational to find out what theories didn't play out and why. I don't have much of a view, aside to say it's so easy for us to be proven wrong.
I think most of the "oil will be super cheap" estimates are concentrating more on the short term. It's possible that oil will dive deeper if the Saudis still see the need for it, to push more competetion into financial trouble. I think the longer term trend is upwards but that could take a long time.
I can't even imagine what will happen to the consumer prices when the oil price rises. If the price is at a low we are still paying high, something is definitely wrong, I would like to see something make sense in the oil business.
I think while we might see it reach about the $120 mark, I think this is where it will peak, and we're more likely to see it stabilize around $100 for quite a while longer yet. It's true that nearly everybody is an expert when it comes to predicting which way the oil price will go, and it's interesting to read what people think on the matter.
"Experts" can speculate all they like. They don't control the prices of oil and their predictions for that reason could be wrong. For anyone who intends to invest in oil they shouldn't sit around waiting for the prices to go up. It will take a while but since there's that belief [and lots of people will be buying oil stock knowing they'll make "smart money" in the near future] you can make some decent money trading whilst the prices are still low.
Exactly, look at oil over the last 15 years. NO ONE in 1999 would have ever predicted or even saw that coming. Oil is supply/demand mixed with cartels and political maneuvering . Oil is such a huge money maker and political issue that things like fracking will come out of nowhere.
