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Face It: Oil Prices Are Not Coming Down – Tell your Neighborhood Sheik

Then there’s the slowdown in developing new oil resources, as several major oil companies cutting their investments.


Michael T. Snyder writes for Seeking Alpha this morning that the price of oil is more likely to fall to $20 rather than rise to $80.

Sure, he concedes, the price of U.S. oil has risen above 50 dollars a barrel again, to $52.93. But he doesn’t believe it will last. He cites the QNB Group analysis and other analysts at the big banks who are “warning that we could soon see U.S. oil hit the $20 mark.”

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The widespread expectation is that through 2015 no significant recovery is likely to happen, which could easily stretch into 2016 and 2017.

Oil prices should average $56 a barrel in 2015, according to QNB, then rising very slowly to reach only $69 a barrel by the end of 2017.

Oil traders have been trying to profit from buying oil on the cheap and storing it, to be sold at higher prices on futures market. According to reports, major oil traders, as well as Chinese oil companies, have been booking super tankers to stockpile oil at the lowest prices, when US inventories are at an all-time high.

Then there’s the slowdown in developing new oil resources, as several major oil companies cutting their investments.

According to Hellenic Shipping News, the number of operational US drilling rigs has fallen by 21 percent to 1, 456 so far in 2015, and this number is expected to fall further.

Except that productivity of oil wells has been rising progressively, and so the drop in number of operational drilling rigs will not start impacting until the end of 2017, according to the QNB Group.



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