Last week Wednesday (it was a holiday here) I had a nice long lunch conversation with a newspaper editor about Malaysia and international oil & gas. I discussed my See Saw theory and Suitable Balance theory, and using my oft repeated figure of $65 as a suitable balance as the center, for this year, I saw $80 as the high side, $65 as the center, and $50 as the low side. Oil prices seemed to me to be pretty much bookended between $50 and $80 for this year.
Yeah, I know, this $50 to $80 range is a fairly large spread, and not in the least controversial. Just pointing out how I arrived at that range.
To recap some of my previous comments here this year, my hoped for "suitable balance" of $65 this year is not too high to hurt global economies, and not too low to hurt oil producers.
So $65 is my "center point" on the oil price See Saw.
If oil prices swing too far either too high or too low, bad things happen. If oil prices can stay near a "suitable balance" then the crazy price roller coasters can be subdued.
Supply & Demand See Saw are similar concept, but that is a different discussion...
This year, whenever oil prices seem to head toward breaking $80, the prices get pulled back down.
So $80 seems to be the high side. Which is $15 higher than my See Saw balance "center point" of $65.
So my logic is that the opposite low side of the price See Saw would be a corresponding $15 lower than my proposed center point of $65, which would be a low side of $50.
Or my concept of a suitable balance might just be wishful thinking on my part.
Anyway, was amused when I read this article by Nick Cunningham today:
Rising Supply Will Keep Oil Prices Rangebound
/ edit: I forgot to include my usual dislaimer:
Just my opinion; as always, you are free to disagree.