Oil price forecast

Discussion in 'General Trading Discussion' started by remnant, Mar 26, 2016.

  1. remnant

    remnant Well-Known Member

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    Why is there so much angst about oil prices increasing this year? Its unfounded though the pointers to this end are strong. For instance, there are conficts raging in the Middle East revolving around Syria and most OPEC members be located there. US fracking companies are folding up citing low oil prices. But this is buffered by the fact that Russia, venezuela, Brazil and others continue to drill and export oil in big quantities since their economies are in the doldrums. Supply will therefore remain strong for the foreseeable future until something drastic like a disaster or war happens.
     
  2. baudwalk

    baudwalk Senior Investor

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    I would suggest the short answer is found in two factions pumping oil. Some countries would prefer to agree on production limits to oil supply so as to sell oil at prices above production costs. While cost per barrel varies among producing countries, the average seems to be somewhere around $40 to $50. Some countries with struggling economies say the heck with production agreements and pump as much oil as possible in order to stave off economic collapse. And then you have Iran that does its own thing.

    In my opinion the angst arises from certain regions of the world. Two examples are represnted by the USA and Saudi Arabia. Those USA states dependent upon tax revenue from oil drillers and refiners face declines in revenue from such companies cutting back unprofitable ventures and increases in unemployment payouts. The unemployment funds are back stopped by the federal government. The Saudis have a high cost per barrel and a lower sale price of oil drains their financial reserves.

    I would suggest you look into the energy sector literature and the OPEC web site for details. There are numerous older threads on this board as well.
     
  3. Corzhens

    Corzhens Senior Investor

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    This is not a prediction but just my opinion based on what I have been reading. The price of oil in the world market have stabilized below $40 per barrel but as of recently the price has been inching to that $40 cap. The effort of OPEC to slow down production may be working for them but with the way Saudi Arabia is pumping oil like crazy, I think the slow down will be negated. And at least for the first half of 2016, the level of below $40 per barrel will remain. Let us take note that most countries who buy oil products are venturing on alternative energy. And that is a disaster for the OPEC.
     
  4. Rainman

    Rainman Senior Investor

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    Some "experts" argue that the oil rally has run its course. Volatile as the oil market is now, it's IMHO impossible to predict which direction oil will head in the near future. I doubt though that the prices will be going under $30 any time soon.
     
  5. kgord

    kgord Senior Investor

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    I am not sure what is driving the anxiety about oil prices since low prices for oil seem to benefit just about everyone. It seems as though the low oil prices are here to stay at least for awhile. However, personally I was hoping that gas here would go below 1.00 per gallon. It never happened sadly. Oh well!
     
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