Posted on 02/21/2015 10:06:40 PM PST by blam
Shane Ferro
February. 17, 2015
Gary Shilling thinks the price of oil is going way lower.
The economist and financial analyst wrote an op-ed for Bloomberg View discussing the various reasons why he thinks the price could get down to $10-20 per barrel.
Basically, supply keeps increasing while demand is shrinking.
Here's an excerpt that pretty clearly lays it out:
U.S. crude oil production is forecast to rise by 300,000 barrels a day during the next year from 9.1 million now. Sure, the drilling rig count is falling, but it’s the inefficient rigs that are being idled, not the horizontal rigs that are the backbone of the fracking industry. Consider also Iraq’s recent deal with the Kurds, meaning that another 550,000 barrels a day will enter the market.
(snip)
(Excerpt) Read more at businessinsider.com ...
Crude oil rose about $8-$10 per barrel over the past month. What brought that about? It defied the basic laws of supply and demand.
Watchya think?
Bad news for Terrorists.
Jihad ain’t cheap.
Drill baby drill.
I tend to say he is correct. Right now the oil industry is trying to take what oil has been pumped out of the ground and place it into any and every place they can store it until there is an increase in demand. At some point they are going to run out of those storage places and when they do...
That will not happen as few fields can produce at a cost if $10 a barrel.
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http://www.zerohedge.com/news/2015-02-18/fed-destroys-mainstream-meme-admits-low-oil-prices-could-dampen-economic-expansion
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WTI Crude Slumps To $50 Handle On Larger-Than-Expected Inventory Build
http://www.zerohedge.com/news/2015-02-18/wti-crude-slumps-50-handle-larger-expected-inventory-build
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WTI $49 Handle, Brent Under $59 On Inventory Build Concerns
http://www.zerohedge.com/news/2015-02-19/wti-49-handle-brent-under-59-inventory-build-concerns
19FEB2015
EIA Crude Inventories & Production Surge To Record Highs
http://www.zerohedge.com/news/2015-02-19/eia-crude-inventories-production-surge-record-highs
19FEB2015
Schizofedia: According To Yellen Plunging Oil Is Both Good And Bad For The Economy
http://www.zerohedge.com/news/2015-02-19/schizofedia-according-yellen-plunging-oil-both-good-and-bad-economy
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Goldman Crushes The “Low Gas Prices Are Unequivocally Good” Meme (In 1 Simple Number)
http://www.zerohedge.com/news/2015-02-20/goldman-crushes-low-gas-prices-are-unequivocally-good-meme-1-simple-number
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US Oil Rig Count Tumbles To July 2011 Lows, Pace Slows
http://www.zerohedge.com/news/2015-02-20/us-oil-rig-count-tumbles-july-2011-lows-pace-slows
20FEB2015
Chinese Oil Re-Stocking Is Over: Inbound VLCCs Drop To 5-Month Lows
http://www.zerohedge.com/news/2015-02-20/chinese-oil-re-stocking-over-inbound-vlccs-drop-5-month-lows
20FEB2015
Every terrorist adventure going on in the world which revolves around Islam....requires Saudi charity money to function. Every mosque built in Europe over the past thirty years...leads back to Saudi charity money. If oil is $40 a barrel....there’s nothing much left in the magic kingdom for any charity operations, and they’d drain their financial reserves to cover various actions. Whether it’s been planned or accidental....one can only guess. But it would seem to me....a bunch of losers need to start thinking about some type of work to pay for food on the table and shelter.
After more than a half decade of over priced gas and all the inflation that it creates. I for one like low cost gasoline. Gas is still overpriced. If it settles at $1.80 give or take 15% we will all be much better off.
All products are shipped via fuel. Lower fuel makes for lower shipping costs. Lower shipping costs make for less expensive goods and services.
The price has gone back up about 40 cents a gal around here in the last week.
Oil is apparently subject to price manipulation by financial instruments.
Let me add one more observation about the Saudi royal family. They are terrified by the political movement in Iran and will do anything to ensure that it does not rock their boat.
The Saudis keep pumping oil to undermine Iran and Russia (which supports Iran). Both countries are highly dependent on oil exports to support their economies. Both need the price of oil to remain above $60 per barrel which is their production cost. Saudi oil costs far less to produce.
The Saudis are waging economic war without firing a single shot.
$10 a barrel? Don’t think so. Too much of the supply costs more than that to extract.
There's this thing called the 'market'. With a commodity such as oil, there are billions of customers, and millions of suppliers. Each of these makes decisions to buy or sell based on their individual needs. If you offer me enough for it, I'll siphon gasoline out of my car, and sell it to you. This turns me from a consumer to a supplier. No one can regularly and accurately predict the market. There are too many unpredictable and uncontrollable twists and turns that control the decisions of the billions of participants. How many oil suppliers do you really think there are out there who would be willing to sell their oil for 10 bucks a barrel? Shilling is simply living up to his name.
Cutting back on drilling rigs isn’t about cutting the supply. When producers cut back on drilling it is about reducing expenditures. There is a price where people shut the wells in and just quit producing. And that point is a lot more than $10 per barrel.
Sure it is. That is why gas and diesel prices have jumped over $.25 a gallon in the past two weeks here in NH.
The party is about to be over and it will be back to $3.75/gal gas before you know it.
It will go to $150 before it goes to $10. OPEC would love to see oil hit the bottom to bankrupt the American oil drillers.
Shilling was a regular contributer.
I don't recall him ever being right.
Horizontal rigs are already laying down as well.
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