Posted on 08/20/2015 7:43:09 AM PDT by thackney
There’s a “conceivable reality” U.S. oil prices may plummet to a new 11-year low of $33 a barrel or lower this year, according to a Citigroup report released Wednesday as oil prices dipped to a six-year low near $40.50 per barrel.
The new “How low can oil go?” report contends that capital markets are “getting nervy” and one of the only ways to stop this downward trend is for North American shale companies to lose more access to capital during the next phase of borrowing negotiations in October, called redetermination.
In February 2009, closing U.S. oil prices last bottomed out at $33.98 a barrel during the Great Recession.
Oil prices are currently in a free fall from a variety of factors including a struggling Chinese economy, strong Saudi and Iraqi production, and the anticipated Iranian influx of oil as soon as next year.
Temporarily stable oil prices near $60 a barrel boosted false confidence from April through June and rig counts and production levels rose — only to see the bottom fall out since the beginning of July. Citi called it a “clearly false recovery.”
Citi sees mostly bearish pessimism the next couple years with oil futures showing prices near $50 a barrel by December 2016 and below $55 a barrel even for December 2017. Eventually, there should be a price breakout back to the $60 to $80 a barrel range, but that is not expected in the near future.
In the U.S., oil production is continuing with Cushing, Oklahoma storage near capacity and more crude simply being moved to the Gulf Coast as a storage alternative. Also, the glut is expected to build up in September as refineries undergo seasonal maintenance after record levels of gasoline production this summer.
Common sense dictates shutting down more North American production, Citi noted, “yet shutting down current production is both costly and can be permanent.” So causing such shutdowns likely will require lower prices over a more extended time frame.
In another report, Citi concluded that a fast V-shaped oil recovery or even a slower U-shaped bounce back will not occur. After an extended and ongoing drop in oil prices, a “series of Ws” is expected with U.S. production ticking up every time prices increase and, thus, driving prices back down.
The question that is now in my mind is this:
Is this another play by Obama and his pals to lower the stock values of the various oil companies so that Soros and his pals can also gain control over another aspect of the ‘energy’ industry?
It’s frustrating to constantly hear stories about low oil prices yet still have to pay over $4.00 a gallon at the pump!
If SoCal means Southern Kaliforni then you know who is at fault for your gas prices. And it is not the greedy oil companies or refineries. Not saying you said or believe that. Just hoping to head off THE let’s blame “Big Oil” for gouging us for the its “our” gas crowd here on FR.
I neither intended nor implied any suggestion of wrongdoing or conspiracy by anyone. It is simply frustrating to know that while crude prices have gone down, there has been no real corresponding price drop at the retail level in Southern California. Prices did drop for a very brief time, then went back up even as they were lowering elsewhere. I understand there have been refinery issues and other factors, but it still sucks!
Dude! Your state has its own gas formulations, green fuel requirements, air permits to dispense fuel permits, severe zoning restrictions on gas stations, not to mention the sky high taxes.
Oil prices and refineries are the smallest of your issues. Oil could go to free and your gas prices won’t go below $3! Don’t even put CA prices anywhere near an honest article on oil and gas.
In the U.S., oil production is continuing with Cushing, Oklahoma storage near capacity and more crude simply being moved to the Gulf Coast as a storage alternative. Also, the glut is expected to build up in September as refineries undergo seasonal maintenance after record levels of gasoline production this summer.
...
Does that mean they can keep prices at the pump high?
I’m aware of all that. At no time did I imply that gasoline prices would go below three dollars a gallon where I live. In fact the station where I usually buy had mid grade at $3.65 per gallon this morning. So prices have fallen a bit in the last week. However, gas was over $4.00 about a week or so ago, when talk of lower crude prices, the coming influx of Iranian supply, etc was all over the news.
Again, I was simply lamenting the price TREND, which was opposite the national movement, not the always high cost of fuel due to taxation and regulation in California. Sometimes I really question the reading comprehension of people around here...dude.
An article about lower crude prices is comprehensible for most of us. What is not is why you lament CA prices being high when crude is falling. Everyone knows they are not connected.
Of course they are connected, obviously. By the same token crude prices are not the only factor. Plus, some of us can walk and chew bubble gum at the same time.
RIG, HP, CRR, SM, CAM, COP, CLR, CLB, CXO, CVX, PTEN, CKH, NOV, XOM, RRC, HES....etc.
Who makes the most money on a gallon of gas?
taxman.
Uncle Jerry.
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