Translate This Page

Tuesday, January 12, 2016

2016 - Nightmare continues for Oil

It is easy to think that the nightmare for oil ended in 2015 but the market is showing us otherwise. 

Crude oil's nightmare continues in 2016 as the price fell toward $30 a barrel.

A supply response to lower prices continues to be slow in coming and signs of a China's slowdown is hurting the oil & gas producers. 

The low oil price is hurting the oil & gas sector

The drop in oil prices has been accompanied by a fresh round of bearish commentary, with Morgan Stanley calling for prices to fall as low as $20 per barrel while Guggenheim sees crude reaching $25 per barrel.

With the continuous drop, the latest range of investment bank forecasts has them dropping as low as $10 a barrel before finally bouncing back.

So, will it be $25, $20 or even $10? How low can it go? 

Primarily to blame was the 14 per cent slump on China's markets this year, which is being driven by concerns over growth that could ultimately hit oil demand. The stronger dollar also makes oil more expensive in overseas territories.


With the price of crude oil collapse by more than 65% to a 12-year low, there are signs that OPEC may have had enough. 

Nigeria's top oil official and OPEC President Emmanuel Kachikwu said the cartel is considering an emergency meeting, perhaps as soon as next month. At issue is whether OPEC would agree to cut production, a move that could help stop the crude price freefall.  

 "I think a ... majority in terms of [OPEC] membership are beginning to feel that the time has come to ... have a meeting and dialogue again once more without the sort of tension that we had in Vienna on this."

When OPEC last met in the Austrian capital in December, it was bitterly divided and refused to cut output. The next ordinary meeting is scheduled for June 2.

Led by Saudi Arabia, OPEC decided in 2014 to wage a price war with low cost producers in the U.S. and elsewhere in a bid to defend market share.

Since then, oil companies have sacked hundreds of thousands of workers, and slashed investment budgets.  


No comments:

Post a Comment