Will Prices Rise in 2019?

I fully expect oil prices [Brent] to rise to around $70 average for 2019.  WTI is a totally different animal.

Posted November 26, 2018

If anybody here hasn't heard my hundreds of ad nauseum comments this entire dang year about my hope for $65 oil [Brent] for 2018 and my hope for $70 oil [Brent] for 2019, please raise your hand, and I can reiterate yet again.

Meanwhile, I'll gently remind that I already warned repeatedly this year that $80 is simply not sustainable, and that the higher that oil goes above $70 then the harder the eventual crash would likely be.

And over to the news, would everyone kindly lay off guzzling the pots of coffee and stop artificially panicking.  Near as I can tell, $70 - ish oil for 2019 still seems about the right balance between the global economy and oil producers.  I hope the current over-reaction on the oil price See Saw will settle back to around $70 by end of this year or early next year.  Just my opinion; as always, you are free to disagree.

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hellenicshippingnews.com said yesterday , that the average price for WTI had been $65 and $72 for Brent in year 2018 , with a high at 3rd October and low at 24th December .

 

Overall , I would predict a lower average for 2019 , than for 2018 ; average prices like during years 2015 and 2016 ($50) .

 

Opec+ might throttle supply , but if Iran sanctions will screw further , Opec+ will be able to push more oil onto the markets .

Venezuela might get online again , since I can't believe , that China and Russia will stay neutral in regards to their investments .

Brazil will deliver more , and Mexico probably could reduce domestic oil theft .

Canada is only capable to throttle production , due to authoritie's measures , if drillers are left to heir own devices , the production in Canada will rise again .

Without any governmental regulations worldwide (International Socialism) oil could cost even $20 and less .

 

Nevertheless , WTI and Brent likely are worth more than many crudes , since they have short ways to their markets : The lower the transportation costs , the higher the oil price .

 

Electric Vehicles are still not yet deployed much , but in 10 years may make up to 10% of cars in use worldwide .

Power-To-Gas and -To-Gasoline will likely become deployed in the next 10 years to come , increasing the pressure on crude oil prices .

 

From tecson.de https://www.tecson.de/historische-oelpreise.html

oelhist.png

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On 1/5/2019 at 11:49 AM, Tom Kirkman said:

I fully expect oil prices [Brent] to rise to around $70 average for 2019.  WTI is a totally different animal.

Posted November 26, 2018

If anybody here hasn't heard my hundreds of ad nauseum comments this entire dang year about my hope for $65 oil [Brent] for 2018 and my hope for $70 oil [Brent] for 2019, please raise your hand, and I can reiterate yet again.

Meanwhile, I'll gently remind that I already warned repeatedly this year that $80 is simply not sustainable, and that the higher that oil goes above $70 then the harder the eventual crash would likely be.

And over to the news, would everyone kindly lay off guzzling the pots of coffee and stop artificially panicking.  Near as I can tell, $70 - ish oil for 2019 still seems about the right balance between the global economy and oil producers.  I hope the current over-reaction on the oil price See Saw will settle back to around $70 by end of this year or early next year.  Just my opinion; as always, you are free to disagree.

What are your thoughts on the recent news regarding Shale wells drying fast than they should...I read in WSJ.

 

Also, $70 doesn't looks that impossible too...yes. 

 

Summer Driving Season and if and when a thaw between U.S. and China's trade war....can certainly take oil to the said level.

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On ‎1‎/‎5‎/‎2019 at 2:39 PM, Karl V said:

Without any governmental regulations worldwide (International Socialism) oil could cost even $20 and less .

Oil could only cost $20, if Saudi Arabia decided to supply the world with oil by itself - a large amount of our oil supply is from offshore Nigeria, Angola, Gulf of Mexico (Mexico - USA), North Sea, Brazil, Oil sands, Oil shale, - these locations require $60 oil minimum. 

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15 minutes ago, NWMan said:

Oil could only cost $20, if Saudi Arabia decided to supply the world with oil by itself - a large amount of our oil supply is from offshore Nigeria, Angola, Gulf of Mexico (Mexico - USA), North Sea, Brazil, Oil sands, Oil shale, - these locations require $60 oil minimum. 

Well....Mr. @William Edwards  here have explained the pricing in a very cogent manner. I'd find the link of the discussion and post it.here.

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If you are buying oil indexes price of oil is important.  If you are buying stocks the question is, will prices go up or down on stocks.  There are a lot of companies that are making a profit at the lower prices.  Furthermore there is a lot of companies with significant cash on hand.  They also have low P/E, some in single digits and others in low double digits.  Combine this with the fact that with a little research many of these stocks are rated sells or at best hold and analysts are rating them as bearish or extremely bearish, there is a good opportunity for some significant increase.  Especially in a market that is still very high.  Granted if the market tumbles again, it is hard to go against the tide.  Looks like there is a lot of money to be made in some of these stocks.  Some of them will assuredly be targets for bigger companies wanting to consolidate acreage, others wanting stronger positions in the Permian, Eagle Ford and SCOOP/STACK plays.  Over the next month and maybe 2 there will be a lot of money made.  There is also a lot of insider trading going on, such as the purchase of $4 million in CHK by an exec.  Not a fan of CHK but there are a lot of people who have made a lot of money on them in recent weeks.  The reality is oil prices probably won't plunge even if the stock market goes south in an ugly fashion again, and with Saudis, Iran and reduction in rigs in the shale plays across America, market sentiment will probably carry prices at least through mid-Feb.  That is plenty of time for oil and gas stocks to claw back some gains based on the big fall they have had.  Just my thoughts after 40 years of working in and watching this industry.  

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4 hours ago, Osama said:

What are your thoughts on the recent news regarding Shale wells drying fast than they should...I read in WSJ.

 

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Will Prices Rise in 2019? Yes, and fall, and end the year much lower than most observers expect. Hint: IMO 2020.

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On 1/5/2019 at 12:49 AM, Tom Kirkman said:

I fully expect oil prices [Brent] to rise to around $70 average for 2019.  WTI is a totally different animal.

Posted November 26, 2018

If anybody here hasn't heard my hundreds of ad nauseum comments this entire dang year about my hope for $65 oil [Brent] for 2018 and my hope for $70 oil [Brent] for 2019, please raise your hand, and I can reiterate yet again.

Meanwhile, I'll gently remind that I already warned repeatedly this year that $80 is simply not sustainable, and that the higher that oil goes above $70 then the harder the eventual crash would likely be.

And over to the news, would everyone kindly lay off guzzling the pots of coffee and stop artificially panicking.  Near as I can tell, $70 - ish oil for 2019 still seems about the right balance between the global economy and oil producers.  I hope the current over-reaction on the oil price See Saw will settle back to around $70 by end of this year or early next year.  Just my opinion; as always, you are free to disagree.

Rather than troubling you by disagreeing, Tom, may I request, instead, your basis for selecting $70 as the point where the economy and oil producers meet? My method uses step-wise accumulation of production, from lowest cost to highest cost, to reach the required 100 MMB/D of worldwide total demand. The reputable numbers for that exercise suggest lower than $60/B. As Canadian Oil Sands producers will confirm, the producer does not always cover his cost. So the $60 number is higher than the practical top. (This explains why the actual average price over history is $40.) The reality is that as long as you have spare producing capacity, which we always do, that can produce oil at less than $10/B as your competition, you can forget recovering your higher cost unless you can hoodwink the traders. Of course, the hoodwinked traders' motto is "Fooled me once, shame on you! Fooled me twice, shame on me!

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25 minutes ago, William Edwards said:

Rather than troubling you by disagreeing, Tom, may I request, instead, your basis for selecting $70 as the point where the economy and oil producers meet? My method uses step-wise accumulation of production, from lowest cost to highest cost, to reach the required 100 MMB/D of worldwide total demand. The reputable numbers for that exercise suggest lower than $60/B. As Canadian Oil Sands producers will confirm, the producer does not always cover his cost. So the $60 number is higher than the practical top. (This explains why the actual average price over history is $40.) The reality is that as long as you have spare producing capacity, which we always do, that can produce oil at less than $10/B as your competition, you can forget recovering your higher cost unless you can hoodwink the traders. Of course, the hoodwinked traders' motto is "Fooled me once, shame on you! Fooled me twice, shame on me!

Nicely put, William.

The niggling thing about the $40 average price over history is that the bulk of the easy, cheap oil appears to be extracted already.  Low-hanging black oil fruit already harvested.

Which means that extraction costs will increase.

So... while $40 is historically accurate for oil, that number is not static, and seems it must inevitably rise, as it becomes increasingly expensive to extract the black oil fruit from further up the tree - easy pickings gone already.

U.S. Shale Oil pundits generally seem to agree that $50 or so is the breakeven point for WTI region light tight oil.  Removing existing and earlier compounded debts from the equation, I reckon that sounds about correct.  Add in debts though, and it's probably closer to $80.

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3 minutes ago, Tom Kirkman said:

Nicely put, William.

The niggling thing about the $40 average price over history is that the bulk of the easy, cheap oil appears to be extracted already.  Low-hanging black oil fruit already harvested.

Which means that extraction costs will increase.

So... while $40 is historically accurate for oil, that number is not static, and seems it must inevitably rise, as it becomes increasingly expensive to extract the black oil fruit from further up the tree - easy pickings gone already.

U.S. Shale Oil pundits generally seem to agree that $50 or so is the breakeven point for WTI region light tight oil.  Removing existing and earlier compounded debts from the equation, I reckon that sounds about correct.  Add in debts though, and it's probably closer to $80.

May I differ on one point? Low-hanging fruit is forever! I do no know for sure, since my x-ray vision fails below 5000 ft, how much cheap oil lies below the Saudi (and Iraq and Iranian) deserts. But I do know two things. 1) I have been told for forty years that the proven reserves in Saudi Arabia are 300 Billion barrels. It has not changed even though 10,000,000 B/D are pumped out continuously. But I do not have to know. I only need to know if it will ever run out. I am sure that it will not. The oil under the desert will, someday, be worth no more than the sand that covers the desert. 2) Quantity of reserves is like spare capacity. As long as there is enough, it matters not how much more than "enough" exists. As long as the Middle East reserves are not running at full capacity and fully depleted, $10 oil will be available. Must I remind you that the stone age did not run out of stones? Or the nuclear age run out of uranium? Better replaces inferior.

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11 minutes ago, William Edwards said:

May I differ on one point? Low-hanging fruit is forever! I do no know for sure, since my x-ray vision fails below 5000 ft, how much cheap oil lies below the Saudi (and Iraq and Iranian) deserts. But I do know two things. 1) I have been told for forty years that the proven reserves in Saudi Arabia are 300 Billion barrels. It has not changed even though 10,000,000 B/D are pumped out continuously. But I do not have to know. I only need to know if it will ever run out. I am sure that it will not. The oil under the desert will, someday, be worth no more than the sand that covers the desert. 2) Quantity of reserves is like spare capacity. As long as there is enough, it matters not how much more than "enough" exists. As long as the Middle East reserves are not running at full capacity and fully depleted, $10 oil will be available. Must I remind you that the stone age did not run out of stones? Or the nuclear age run out of uranium? Better replaces inferior.

And there is yet another aspect to consider.  That is or will be declining demand in the West.  

I predict the major cause will not be either "carbon taxes" or even hybrid autos.  The reduction in fuels use will come from Old Age. The big population bulge from post-WWII births is hitting retirement, and those retired folks will in large part stop driving, and move from the Cold Belt to the Sun Belt.  You see the same dynamic playing out in Europe also, with (for example) Germans retiring to Thailand and Britons retiring to Spain.  Old, worn-out energy-hog houses in the Northern States are and will continue to be torn down, and new housing in the Southern States with much lower heating fuel demand.  Plus those autos of the elderly tend to sit, used to go for groceries and (occasionally) to church.  There does not seem to be much discussion about that demographic trend, but it sits out there, chopping away at fuels use. And that is why I predict $27 oil.

 

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