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Oil May Fall Below $25 Next Year, Merrill Lynch Says
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dmcowen674
No Lifer
According to the Supply & Demand pundits in here that was $147 a barrel.
Capt Caveman
Lifer
Can you stop making moronic posts? You still haven't explained why oil has dropped in price, Mr. Next Stop $200.
dmcowen674
No Lifer
Hell, dumb Americans can't remember what they had for breakfast, forget about 6 years.
Aw I missed the priviosu link, but heres the article anyhow
I've seen it happening already With the Bakken wells, and when it get down to 25 the stripper wells from the Williston Basin will also shut down
Counter opinion to $25
US stripper wells will be the key to determining oil prices over the next couple of years rather than OPEC. Bernstein analysts Ben Dell and Neil McMahon made that argument in a presentation today. ?It is quite interesting that OPEC is turning into a largely irrelevant organization,? McMahon said. From what we have seen of late he certainly has a point. OPEC has met three times this fall and is scheduled to confab once again on Dec. 17 in Algeria. It has announced 2 million barrels per day in cuts. Yet the price has now fallen more than 60% to the dreaded mid-$40s per barrel.
Instead, McMahon says the serious, market-impacting production cuts of the next couple of years are likely to come in North America, and especially from small stripper wells that produce only 15 barrels per day or so. Those amount to a hefty 85% of U.S. onshore wells and account for about 18% of such production. These wells require care and feeding and are the easiest to shut down when prices fall. Bernstein figures that as much as 1.3 million barrels per day could eventually come off the market.
The credit crunch is also hurting supply with smaller exploration and production companies struggling to finance drilling. OPEC sources also say that smaller refining companies are having trouble gaining accesss to credit to finance oil purchases.
Bernstein views the oil market as oscillating between the rising costs of producing the marginal barrel of oil?now perhaps $80 per barrel?and the cash cost of producing the oil?now around $40 per barrel. With demand dropping fast, oil is falling toward this cash cost and could overshoot. A Merrill Lynch analyst warned that $25 per barrel was possible. But when it costs more to produce oil than it brings in, production will be shut down. That?s especially true of small, marginal operations.
Bernstein?s outlook is for prices in the $40 per barrel range early next year, followed by a recovery to the $70 zone toward the end. They think prices could average $80 per barrel in 2010. This scenario implies optimistic assumptions about a global economic recovery.
I've seen it happening already With the Bakken wells, and when it get down to 25 the stripper wells from the Williston Basin will also shut down
Counter opinion to $25
US stripper wells will be the key to determining oil prices over the next couple of years rather than OPEC. Bernstein analysts Ben Dell and Neil McMahon made that argument in a presentation today. ?It is quite interesting that OPEC is turning into a largely irrelevant organization,? McMahon said. From what we have seen of late he certainly has a point. OPEC has met three times this fall and is scheduled to confab once again on Dec. 17 in Algeria. It has announced 2 million barrels per day in cuts. Yet the price has now fallen more than 60% to the dreaded mid-$40s per barrel.
Instead, McMahon says the serious, market-impacting production cuts of the next couple of years are likely to come in North America, and especially from small stripper wells that produce only 15 barrels per day or so. Those amount to a hefty 85% of U.S. onshore wells and account for about 18% of such production. These wells require care and feeding and are the easiest to shut down when prices fall. Bernstein figures that as much as 1.3 million barrels per day could eventually come off the market.
The credit crunch is also hurting supply with smaller exploration and production companies struggling to finance drilling. OPEC sources also say that smaller refining companies are having trouble gaining accesss to credit to finance oil purchases.
Bernstein views the oil market as oscillating between the rising costs of producing the marginal barrel of oil?now perhaps $80 per barrel?and the cash cost of producing the oil?now around $40 per barrel. With demand dropping fast, oil is falling toward this cash cost and could overshoot. A Merrill Lynch analyst warned that $25 per barrel was possible. But when it costs more to produce oil than it brings in, production will be shut down. That?s especially true of small, marginal operations.
Bernstein?s outlook is for prices in the $40 per barrel range early next year, followed by a recovery to the $70 zone toward the end. They think prices could average $80 per barrel in 2010. This scenario implies optimistic assumptions about a global economic recovery.
feralkid
Lifer
Right...bend over and accept our cheap petroleum.
😉
Seriously...so what? Then the price will rise to where it is again profitable to produce domestically.
Petroleum production in the U.S. is not a "use it or lose it" proposition; it doesn't spoil, it stays in the ground where it has been for eons.
And as Russia goes down they'll take Europe with em.
MOSCOW (AFP) ? Prime Minister Vladimir Putin warned Thursday that Russia would cut natural gas supplies that transit through Ukraine to Europe if Kiev does not pay its bills or siphons gas meant for other customers.
"If our partners do not fulfil their agreements, we will reduce deliveries," Putin said in a televised question-and-answer session with Russian citizens, referring to Ukraine.
He vowed, however, that European customers would get a "detailed" advance warning if such a step were necessary.
Putin reiterated Russia's demand that ex-Soviet republics like Ukraine make the transition to paying international prices for gas from the Soviet-era subsidized rates that they are stil paying.
But Moscow understood that this could not happen overnight and was prepared to continue a step-by-step adjustment, he added. "The transition should be gentle."
Putin said Ukraine still owed Russia more than two billion dollars for gas supplies.
"Indeed, our Ukrainian partners have not yet paid off their debts."
He acknowledged that Ukraine, like Russia and other countries, was facing serious economic challenges in the current global crisis, but said Moscow was in no position to continue subsidising Ukrainian gas purchases.
"How can we leave in place the prices of the current year?" he asked rhetorically.
Then, drawing on a Ukrainian colloquialism -- and speaking in Ukrainian -- Putin added: "Have you lost your mind?"
On January 1, 2006, Russia briefly cut gas supplies to Ukraine amid a bitter dispute on prices, resulting in some shortfalls to customers further down the line and provoking concern throughout Europe.
MOSCOW (AFP) ? Prime Minister Vladimir Putin warned Thursday that Russia would cut natural gas supplies that transit through Ukraine to Europe if Kiev does not pay its bills or siphons gas meant for other customers.
"If our partners do not fulfil their agreements, we will reduce deliveries," Putin said in a televised question-and-answer session with Russian citizens, referring to Ukraine.
He vowed, however, that European customers would get a "detailed" advance warning if such a step were necessary.
Putin reiterated Russia's demand that ex-Soviet republics like Ukraine make the transition to paying international prices for gas from the Soviet-era subsidized rates that they are stil paying.
But Moscow understood that this could not happen overnight and was prepared to continue a step-by-step adjustment, he added. "The transition should be gentle."
Putin said Ukraine still owed Russia more than two billion dollars for gas supplies.
"Indeed, our Ukrainian partners have not yet paid off their debts."
He acknowledged that Ukraine, like Russia and other countries, was facing serious economic challenges in the current global crisis, but said Moscow was in no position to continue subsidising Ukrainian gas purchases.
"How can we leave in place the prices of the current year?" he asked rhetorically.
Then, drawing on a Ukrainian colloquialism -- and speaking in Ukrainian -- Putin added: "Have you lost your mind?"
On January 1, 2006, Russia briefly cut gas supplies to Ukraine amid a bitter dispute on prices, resulting in some shortfalls to customers further down the line and provoking concern throughout Europe.
brandonbull
Diamond Member
I'm more of a Chilean guanacos piss man myself.
LegendKiller
Lifer
How much oil in this world is sold using dollars?
All lies. Why just last week a Russian analyst disproved this with a perfectly written report. This report clearlyed showed the United States was going to fail, split up, and have its huge native american population rise up. While Russia takes over and leads the world out of this economic dump.
You cant argue those facts and logic. Try it, TRY IT I DARE YOU!
LegendKiller
Lifer
ROFL. Are you kidding me?
It's the currency it is *QUOTED* in, not what it is traded in.
I worked in the oil industry for a while...
After oil prices of the past 3-5 years and the tremendous profits hauled in, all US oil companies have plenty of cash reserves to whether out multiple years of low crude oil prices.
E.g. Exxon has pulled in record profits the past 2-3 years... they are sitting on a hoard of cash right now. Now they might have to dip into that a bit.
This is not a long term problem... it is simply the nature of the business... oil prices vary a lot on supply and demand.
After oil prices of the past 3-5 years and the tremendous profits hauled in, all US oil companies have plenty of cash reserves to whether out multiple years of low crude oil prices.
E.g. Exxon has pulled in record profits the past 2-3 years... they are sitting on a hoard of cash right now. Now they might have to dip into that a bit.
This is not a long term problem... it is simply the nature of the business... oil prices vary a lot on supply and demand.
dmcowen674
No Lifer
Yep
They'll ride it out just fine till they shoot it back up, this time towards $200 and $10 gallon.
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