Tom Kirkman

I've Warned Repeatedly About Hurting Global Economic Balance and Economies if Brent Goes Too Far Above $70.00. *It's Happening*.

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< sigh >

Talking till I'm blue in the face, to no avail, apparently.

Brent reaches $74 and immediately Asian markets drop.

Today's news:

Asian markets slip as oil prices surge

Asian markets were largely down in early trading Tuesday as oil prices surged to nearly six-month highs after the U.S. said it would soon impose sanctions on all buyers of Iranian oil.

Benchmark U.S. crude added 34 cents to $65.89 per barrel in electronic trading on the New York Mercantile Exchange. The contract surged $1.48 to $65.55 per barrel on Monday. Brent crude, used to price international oils, gained 29 cents to $74.33 per barrel in London. It jumped $2.07 to $74.04 per barrel in the previous session.


A reminder of just a bit of my repeated earlier warnings:

I expect an average of $70 Oil [Brent] for 2019.

In my view, $70 oil is a suitable, sustainable balance between global oil producers and global oil consumers...
Not too high, not too low. Goldilocks price.

At $70 oil, sufficient profits can be made by most oil producers to reinvest in exceedingly cost intensive Exploration activities, as well as get caught up on long-delayed major maintenance activities, as well as un-mothball years-delayed projects.  (Some OPEC country leaders that depend on $90+ oil prices may be inching toward receiving Darwin Awards from their minions.  Can't please everyone...)

My concern at the moment is the Mainstream Media and traders will go into an irrational feeding frenzy and push oil prices artificially higher by this Summer, overshooting the Goldilocks $70 price and push *too high* toward $80+ prices.  And then in Fall this year over-react again and drop back down below $70 yet again.

Just look what happened last Summer and Fall... seems like a repeat is heading this way again.



No.  Just ... NO.
Stick to $70.00 Brent, please.

$70 Brent should keep global oil prices relatively stable.

OPEC getting greedy and pushing for $80+ Brent is very bad news, in my opinion, as it will upset the current, suitable, sustainable balance between most global oil producers and most global oil consumers.

Even $75 Brent is too high, in my opinion, as it will just push down oil prices again later.

Enough already with the $80+ oil price greed roller coaster.

● $70.00 Brent seems optimum to me. ●

Clearly, many others will disagree.  I've heard the many arguments for $80+, $90+, $100+, $140+ oil, but I simply do not agree that these higher oil prices are sustainable.

Short term greed wrecks havoc on global economies.


In my view, Brent needs to stay at or below $70 and WTI needs to stay closer to $50 or else the oil price rollercoaster will start up again.

● $60+ WTI is unsustainable, in my view.  $50-ish seems to be the Goldilocks zone for WTI.

$75+ Brent is unsustainable, in my view.  $70.00 seems to be the perfect, magical Goldilocks zone for Brent.

Moving too much higher or too much lower from these numbers for WTI and Brent will likely throw out of whack the current, wonderful, suitable balance between most oil producers and most oil consumers.

Oil Traders and oil producers, please don't get greedy and mess everything up.

Remember not long ago, the mantra of oil prices being "lower for longer" and "$40 forever"?

Those mantras just a few years ago were the direct result of oil producers and oil traders getting too damn greedy and choking the oily goose for a few years.

● $70 Brent and $50 WTI, please.

● Balanced, suitable, optimum, please.


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I am not sure if you are talking about an average price or not.  In the case you expect an average price of $70, you have to account for the time below $70 with time above $70, the average can't get to $70 if it's been below $70 by just staying at $70 and we know that isn't the case.  So expect some moves above $80 to account for the time below $70. 

It may well be that $70 is the number but the price doesn't stay in one place for very long.  As to WTI at $50, that isn't a good price, it needs to be over $60 for the debt to be paid back and operators and investors to make a decent return.  There is no reason the price of WTI should be $20 less than Brent IMO.  Keep in mind, the operators are not getting the posted price, they are getting at times as much as a $20 discount.  So you are calling for oil as low as $30 in the Permian.

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