Posted on 10/27/2014 7:49:15 AM PDT by SeekAndFind
Crude oil just broke $80.
In morning trade on Monday, the price of crude oil fell below $80 a barrel for the first time since mid-2012 as energy prices continue to plummet around the world.
The most recent drop in oil, which has been a bear market since topping out at about $107 during the summer, follows a cut in oil-price expectations from Goldman Sachs' Jeff Currie over the weekend.
Currie took his oil-price forecasts for WTI Crude to $75 a barrel in the first quarter of 2015 and to $70 a barrel in the second quarter of next year.
Longer-term, Currie expects WTI prices to stabilize near $80 a barrel, and Currie said that "uncertainty around the required price to slow down US shale production growth is a key risk to our forecast."
Currie's forecast relies on three key reasons:
* We have greater confidence in the scale and sustainability of US shale oil production. This implies that the global cost curve has shifted lower and that cost deflation is sustainable.
* We forecast that accelerating non-OPEC production growth outside North America will outpace demand growth, leaving the global oil market oversupplied.
* We believe that OPEC will no longer act as the first-mover swing producer and that US shale oil output will be called upon to fill this role.
(Excerpt) Read more at businessinsider.com ...
Somebody draining our Strategic Petroleum Reserve just before an election?
>> But at what price does shale become unprofitable?
Great question. It’s not “a” price; whether production is profitable depends on various factors (where, how old, what technology are some I can think of off the top of my head).
Here’s some data to chew on:
http://www.reuters.com/article/2014/10/23/idUSL3N0SH5N220141023
If we’re lucky, thackney will weigh in on the subject. He is well informed.
Stick it to the Saudis who no longer control the oil market.
Pisses off the lib enviromental whackos.
Pay less for gasoline at the pump.
Lower prices on shipped goods (everything)
Potential for turnaround in the economy...job creation.
I remember people dropping the catalytic converters off so they could use Regular gas. Later when laws made that illegal people would drop off the converter and drive a rod through the innards, then would put it back on. Inspectors could not tell it had been fixed to run on Regular.
“It’s a Big Oil conspiracy! They’re colluding to lower prices!”
I always thought that Saudis, Soros etc. fund the Greenies to shut down US energy production. Big Arab made Al Gore a billionaire.
Last year I told my lofo ‘Rat neighbors to watch gas prices drop like a rock before this election.
At about $80. Drilling is coming to a screeching halt, with companies limping along to preseve leases.
As the price lowers, the rate of drilling will slow down. Marginal locations and companies with too much debt are going to stop spending as much.
But remember when the reach the “average” (median) break even price for a field, that means that half of the wells are produced at less cost. It will back down the drilling, it won’t shut down the drilling.
They won’t be shutting down wells already completed. The cost was already spent bringing them online. But if price drops low enough, some companies will not have the cash flow to keep adding new wells.
I’m going to fill up in San Jose today for just under three bucks a gallon for the first time in like three years.
Fischer Tropsch: If America is truly the “Saudi Arabia of Coal” then this is a great way to produce diesel. If just 33 per cent of motor transportation could switch from gasoline to diesel, we could tell OPEC to go pound sand!!!
thanks
They may not be able to ‘afford’ to cut of nat gas to Ukraine this winter.
Palin, Bush and others talked about domestic oil production and were mocked by the left, but now it appears it is U.S. oil production driving down the worldwide price.
There is a field of oil wells near my office. When the price per barrel goes down below $100 per barrel, most of them are idle, but when it goes up, they are all pumping away.
Coincidence?
Or good business practice?
Screeching halt at $80? We were adding rigs the last time we were at this price. And the Industry has gained efficiency since then.
Sure we will drill less at $80 than at $100; less dollars will be coming in. But the industry is not shutting down at that price.
Where are you located?
Or good business practice?
Horrible business to anyone that understand cash flow. If you shut down for two month, your payments are not delayed 2 month, they are delayed until the end of your production time, many years from now.
I’m still waiting for Obama/Obama Administration to give credit to US oil drilling for the lower prices at the pumps.
THANK YOU OBAMA FOR GETTING OIL PRICES TO DROP.....(place sarc tag here)
Most pumping interludes have nothing to do with price.
Watch the rig count, that’s where the action (or non-action) is.
Keerect, rig count is everything and also permitting.
And our county has had neither in so long I think the cow has died.....
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.