Oil prices forecast

[MahmoudSWD + 1]

Hello All

My name is Mahmoud, I am new here.. i am happy to join you all ☺️

I've been appointed to a new position (Sourcing) in my company ( El Sewedy Electric) .... since our industry consume huge amounts of oil based raw materials like Polyethylene, i need your help on 2 things:

1- I need to get a trusted professional forecast of oil prices in 2019.  

2- How Brexit would impact oil prices.

 

Thanks

[Tom Kirkman + 8,860]

As far as I know, there is no trusted professional forecast of oil prices for 2019.  Just educated guesses.  Lots of conflicting educated guesses.

And professional guesses:

As far as Brexit impacting oil prices, nobody knows.  Will Brexit even happen?  Nobody knows.

[Rodent + 1,424]

yep, what you are asking for doesn't exist. oil price forecasts vary widely. if you have a moment, visit our great oil price challenge thread. through September last year our forum members took a stab at guessing oil prices' 4 week average as of December 31st. while the official data is still not in, I can say with reasonable certainty that almost 100 percent of our hundreds of informed (and uninformed) guesses are way way off the mark. Industry analysts didn't fare much better than we did. 

 

[JoMack + 547]

Can't predict oil prices since there are too many variables, OPEC overproduction, U.S. production and exports, instability in exporting nations, disruption, weather, etc.  

On Brexit, I don't see oil prices being moved too much since the Brits import a lot of crude and North Sea production is on the decline.

[Emmanuel.Mintah + 2]

OPEC cut by 3months time will come to nothing as U.S head towards becoming a leading prducer in 5years,As price starts to rise producers will produce more to cover cost and make profit,supply will up snd price will fall by mid year with the world slow demand

[Lorenzo + 9]

OIL Reserves in Saudi Arabia alone, as of January 2007, Saudi Aramco's proven reserves were estimated at 259.9 billion barrels (41.32×10⁹ m³), comprising about 24% of the world total. They would last for 90 years at the current rate of production. 85% of Saudi oil fields found have not produced oil yet.

With demand slowing due to recessionary pressures....and supply being plentiful....it is hard to see crude price increasing other than OPEC manipulation to increase revenues.

[Lorenzo + 9]

The price of crude is highly dependent on the whims of Donald Trump, who instructs Saudi what the price should be.   He wants to keep it low because he thinks it improves the economy!!!

[Auson + 123]

On 1/15/2019 at 11:51 AM, MahmoudSWD said:

Hello All

My name is Mahmoud, I am new here.. i am happy to join you all ☺️

I've been appointed to a new position (Sourcing) in my company ( El Sewedy Electric) .... since our industry consume huge amounts of oil based raw materials like Polyethylene, i need your help on 2 things:

1- I need to get a trusted professional forecast of oil prices in 2019.  

2- How Brexit would impact oil prices.

 

Thanks

Hello Mahmoud,

Well you could do worse than to read every article currently on OilPrice.com that could help you form a view of where you think Oil prices might go this year. Just a thought are you able to hedge or place forward contracts for the coming year ? In my view forward oil prices are quite favorable right now and I don't think too many people are forecasting it to trade lower all year.

All the best.

[Ashok Coomar + 2]

Oil prices are likely to be in the range of $40-50 or even lower. All indications are bearish. Impact will be felt only when IMO2020 kicks in. No impact of Brexit. 

[jaycee + 348]

Work out what your worst case scenario is for the company, e.g. $100 a barrel, and hedge against it. Oil could go anywhere just make sure you have insurance if it could take your company down at that level. Insurance could be foward bought oil or building a tank farm. I would be surprised if your company does not already forward buy oil mind you.

[Joseph Scarafone + 20]

The Saudi Oil Minister says they break even on their budgets at $80 a barrel.  We now know the economic slow down is not because of the price of oil but because of the FED and uncertainty surrounding the radical left's ideas, in the u.s.  

$70 oil is not going to hurt the American economy at all.  The Saudi's have repeated their target is $70 to $80 a barrel based on their budgets.  I guess its their only export?  Anybody?  

Incidentally I saw somebody post that B of A said $35 to $70 a barrel range.  According to the reports I read break even on average for American Pumpers is $36.  So my "guess" is a range  from $36 to $80.  Keeping in mind I'm a newbie.  

Edited January 17, 2019 by Joseph Scarafone

[jaycee + 348]

4 minutes ago, Joseph Scarafone said:

The Saudi Oil Minister says they break even on their budgets at $80 a barrel.  We now know the economic slow down is not because of the price of oil but because of the FED and uncertainty surrounding the radical left's ideas, in the u.s.  

$70 oil is not going to hurt the American economy at all.  The Saudi's have repeated their target is $70 to $80 a barrel based on their budgets.  I guess its their only export?  Anybody?  

The economic slowdown is world wide and is caused by the shrinking off world trade, oddly coinciding with Trump implementing his policies on trade. The FED is merely reacting to what they see ahead. ie a world wide recession.

Oil could spike higher but hte risk is more to the downside if you ask me due to the coming slowdown

[Joseph Scarafone + 20]

I know what you're saying but the price is manipulable within the stated ranges by the powers at be.  They will adjust supply to demand, not the other way around or at least so they've indicated.  

[jaycee + 348]

45 minutes ago, Joseph Scarafone said:

I know what you're saying but the price is manipulable within the stated ranges by the powers at be.  They will adjust supply to demand, not the other way around or at least so they've indicated.  

There are limits to what they can do and shale producers have no concept of moderation so any price rise will just increase their production, once their pipeline bottlenecks are sorted they will be able to fill a lot of any OPEC+ cuts. Its very difficult just now to predict anything mind you as there are so many different angles, I mean what will Trump do in April regards the concessions given to countries for Iranian oil?

[ANANDA + 3]

On 1/15/2019 at 3:06 PM, Tom Kirkman said:

As far as I know, there is no trusted professional forecast of oil prices for 2019.  Just educated guesses.  Lots of conflicting educated guesses.

And professional guesses:

As far as Brexit impacting oil prices, nobody knows.  Will Brexit even happen?  Nobody knows.

Dear All,

The forward a forecasts for 2019, The oil price will be $70 per barrel in 2019, but noted that global demand was a key factor, "...sensitivities to economic growth are also very meaningful and previous economic meltdowns have led to collapses in oil demand."

Specifically, it estimated that "every 1% move in global GDP shifts oil demand by 0.6mn barrels per day (bpd), suggesting Brent could drop to $35 per barrel if global GDP slows down from 3.5% to 2.0%."

Ananda

 

[Tom Kirkman + 8,860]

3 hours ago, ANANDA said:

The forward a forecasts for 2019, The oil price will be $70 per barrel in 2019, but noted that global demand was a key factor, "...sensitivities to economic growth are also very meaningful and previous economic meltdowns have led to collapses in oil demand."

Hmmmm, I wonder why that $70 oil for 2019 sounds so familiar... 

 

[Top Oil Trader + 469]

all kinds of people will give you forecasts here from 20 - 100, flip a coin, pick one. But if we are focusing on just today, today's price will hit $55.13.

You need to focus on 3 months out not where it will trade all year, that's impossible to know, but 3 months out, is easy if you know how to use charts. Oversupply will be a major factor, could drop the price, slowing econ could drop the price, China deal raise demand, OPEC  cuts raise the price,

only someone with an exceptional view of charts, which you wont find out there, will be able to tell you where prices are headed near term, which will cut right through whatever news surprises appear in that timeframe.

Last year people here and analysts everywhere were 100% sure we would hit 80 - 100, and what happened, no one had a clue, even when it hit 50, only then did people wake up and sense something wasn't right. By then the industry had already lost trillions.

[Tom Kirkman + 8,860]

1 hour ago, Top Oil Trader said:

Last year people here and analysts everywhere were 100% sure we would hit 80 - 100, and what happened, no one had a clue, even when it hit 50, only then did people wake up and sense something wasn't right.

Ahem.  I'm not a trader, and I don't use charts.  My global view of oil & gas is much longer than 3 months.

A few of my threads from last year (I started over 100 threads last year with "oil" in the title)

April 2018:  Oil Prices are Starting to Rise Too High

May 2018:  Harbinger of the coming oil price rollercoaster

May 2018:  High Oil Prices Becoming Herd Mentality

June 1018:  So about my ad nauseum comments hoping for $65 oil this year...

August 2018:  Oil Prices Bookended for Rest of This Year? Maybe $50 to $80? (My old 'See Saw' theory redux)

September 2018:  $80 oil is simply not sustainable long term. $100 oil will crash. Iran fears overblown. Traders greedy.

October 2018:  $70 Oil [Brent] Continues to be My Hope for 2019

December 2018:  Sub-$50 WTI and $70 Brent may be more suitable for 2019

 

@TomTom @CMOP @Rodent

=================================

My comment from May 2018:

My view on oil prices are pretty clear.  I've been pretty consistent about my views on oil prices since 2015.

But since I'm new to this forum, guess I need to reiterate.

In 2015 and 2016 I commented ad nauseum (mostly on the new defunct Oilpro forum) that I would be happy if oil was a stable average around $50 to $60, but closer to $50.  

In 2017, I changed my view and comments to I would be happy if oil was a stable average around $50 to $60, but closer to $60.  

This year, I changed my view and comments to I would be happy if oil was a stable average around $65.

And I would be happy if oil was a stable average around $70 for 2019.

Note that I think the value of the US Dollar will be devalued a bit later this year and early next year as the PetroYuan starts gaining international acceptance.

So in real terms, I'm actually hoping for oil prices to average $65 for 2018 and 2019.

$100 oil is not sustainable long term.  $300 oil is just nuts.

Excessively high oil prices would kill global economies, and crash oil prices all over again.

 

[TomTom + 183]

$65 (as you mentioned various times last year) seems to be the sweet spot for Brent. 

Sub-$50 WTI and $70 Brent may be more suitable for 2019  This surprises me somewhat - do you think the spread between WTI and Brent can grow as big as $20+ ?

[Old-Ruffneck + 1,177]

42 minutes ago, TomTom said:

$65 (as you mentioned various times last year) seems to be the sweet spot for Brent. 

Sub-$50 WTI and $70 Brent may be more suitable for 2019  This surprises me somewhat - do you think the spread between WTI and Brent can grow as big as $20+ ?

The spread for W.Canadian and WTI in early December was over 30.00 dollars. So to answer your question, by all means it can. Louisiana Light was few days ago 10 dollar spread. Why all this insistence to compare different region oil makes no sense. Oil is not Oil (apples to apples.) Each oil from different regions is easier or harder to make say gasoline and light liquids. Some are good only for asphalt. So not all oils are the same.

Edited January 18, 2019 by Old-Ruffneck

[TomTom + 183]

3 minutes ago, Old-Ruffneck said:

The spread for W.Canadian and WTI in early December was over 30.00 dollars. So to answer your question, by all means it can. Louisiana Light was few days ago 10 dollar spread. 

With all due respect - the WCS/ WTI spread of $30  is because of a lack of export infrastructure... 

WTI (especially in 2019 as certain links to Corpus Christi and LOOP are completed) is very unlikely to trade at these discounts as they'll simply ship the surplus oil to Asia or Europe, keeping Brent prices in check. Next to that, under $50, most shale producers aren't even managing to stay cash flow positive (we'll see that in 3 months from now when Q1 earnings come in).

[Old-Ruffneck + 1,177]

1 minute ago, TomTom said:

With all due respect - the WCS/ WTI spread of $30  is because of a lack of export infrastructure... 

WTI (especially in 2019 as certain links to Corpus Christi and LOOP are completed) is very unlikely to trade at these discounts as they'll simply ship the surplus oil to Asia or Europe, keeping Brent prices in check. Next to that, under $50, most shale producers aren't even managing to stay cash flow positive (we'll see that in 3 months from now when Q1 earnings come in).

Correct!!! 1st quarter will tell the story. But WCS and WTI both have similar issues of pipeline constraints. I can tell you as I rode around a lot of small pipelines are being installed from Odessa to Wink down to Monahans corridor. There isn't a pipeline of 36 inch or larger going to Corpus anyway near complete. 2020 maybe, and not so sure 100% that line is going to Corpus. Not all landowners are on board with the oil industry to sell the rights to their land. Galveston will probably end up at least one major line.

The rigs are dropping fast and couple friends said for now it lease fulfillment time. Those contracts will be burned up soon. My takeaway is they will drill super easy formations and when that tapers down, there are over 5k DUC wells just in west Texas. I was in the Kermit/Wink area yesterday and too many too count waiting for completion. No where to send the oil at present, capacity is at max. 

[TomTom + 183]

12 minutes ago, Old-Ruffneck said:

Correct!!! 1st quarter will tell the story. But WCS and WTI both have similar issues of pipeline constraints. I can tell you as I rode around a lot of small pipelines are being installed from Odessa to Wink down to Monahans corridor. There isn't a pipeline of 36 inch or larger going to Corpus anyway near complete. 2020 maybe, and not so sure 100% that line is going to Corpus. Not all landowners are on board with the oil industry to sell the rights to their land. Galveston will probably end up at least one major line.

The rigs are dropping fast and couple friends said for now it lease fulfillment time. Those contracts will be burned up soon. My takeaway is they will drill super easy formations and when that tapers down, there are over 5k DUC wells just in west Texas. I was in the Kermit/Wink area yesterday and too many too count waiting for completion. No where to send the oil at present, capacity is at max. 

Thanks for the observations here @Old-Ruffneck always good to see some on-the-ground factchecking!

How do you see the water supply/disposal situation in these areas? Is everything still normal, or do you expect this to be a disrupting/ cost lifting factor within the next 12 months?

[Old-Ruffneck + 1,177]

35 minutes ago, TomTom said:

Thanks for the observations here @Old-Ruffneck always good to see some on-the-ground factchecking!

How do you see the water supply/disposal situation in these areas? Is everything still normal, or do you expect this to be a disrupting/ cost lifting factor within the next 12 months?

That story is not altogether accurate. The writer seemed to be trying to scare investors (my opinion). There is enough water in the not so far north they will divert with 6 inch plastic lines that are on big freakin' spools. They already have a lot of 4 and 6 inch lines laid. Imperial Reservoir, and Orla lake, Red Bluff Reservoir Right now is flowing normal get their water from the Pecos river. Red Bluff is 7 miles long and couple miles wide. Those 2 lakes can handle a lot of volume. I will say they are setting up separation tanks and re-using water more. Much more cost effective than sending it 15k into the ground to dispose of. The wastefulness is much Improved from say even 5 years ago. In the next couple weeks if weather holds I will get out and get some photos. Ya gotta take the backroads to get accurate idea of what's going on. Where there was 6 rigs parked by Pyote last week, now 3 on same pad. Tells a short range picture. Curios what Baker says rig count here is now. 

[Old-Ruffneck + 1,177]

1 hour ago, TomTom said:

Thanks for the observations here @Old-Ruffneck always good to see some on-the-ground factchecking!

How do you see the water supply/disposal situation in these areas? Is everything still normal, or do you expect this to be a disrupting/ cost lifting factor within the next 12 months?

1 sq mile @ 1 inch rain roughly 17.4 million gallons. There is a lot of runoff rain here when it does rain. It wouldn't be hard to make catch reservoirs to help with water issues. You don't see it being done right now as not an issue.