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Page added on October 26, 2015

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Oil prices ‘to rise to $60.2 in 2017’

Oil prices ‘to rise to $60.2 in 2017’ thumbnail

Oil prices will stabilise at around $55 per barrel next year before picking up to $60.2 per barrel in 2017, according to an analysis by Qatar National Bank (QNB).

QNB said oil markets have been oversupplied since the beginning of 2014 leading to a sharp fall in prices.

However, the bank predicted prices will stabilise as the glut is cleared, according to Qatar News Agency (QNA).

Oil markets, like other markets, have a tendency to adjust and clear excess supply as low prices encourage higher consumption, the bank said, claiming that the adjustment process is already under way.

QNB’s report pointed out that US oil production has so far withstood the global drop in oil prices – but been less resilient than expected. Meanwhile, the fall in rig count, which has resumed again after stalling mid-year, suggests US shale oil production might be past its peak.

QNA said the bank has previously argued that there is no link between rig count and oil production because producers tend to first shut down wells in the least productive regions.

However, it cited data from the US Energy Information Administration (EIA) revealing accelerating output decline at the seven most productive regions.

Consequently, the International Energy Agency (IEA) has forecast that US production of oil will fall by 0.4mn bpd from 2015 to 2016, the bank said.

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14 Comments on "Oil prices ‘to rise to $60.2 in 2017’"

  1. joe on Mon, 26th Oct 2015 11:53 am 

    Only prices are not low! Just comparitivly low. If oil was say 30-40 dollars then more oil would be used relatively. But now, even at a collapse of almost 50% oil consumption is steady, because of efficiency and moves to greener fuels, oil will not be wanted, gas is still cheaper than 30 dollar oil, it’s simple math. But it will still end fraking because its a form of tight oil and therefore belongs in the peak oil model of economics we face.
    The glut will be resolved when supply matches demand, ie sombody cuts, or sombody sinks. Then prices will go back up, and we will continue to switch to alternatives, eventually leaving oil production as feedstock for plastics etc which will probobly get more expensive as we ride on the bumpy plateau.

  2. rockman on Mon, 26th Oct 2015 11:57 am 

    What an idiot. Everyone knows all grades of oil will be selling for $60.35 in two years.

  3. shortonoil on Mon, 26th Oct 2015 12:15 pm 

    That’s not right Rock, it will be $60.32 on Mondays, Tuesdays, and Wednesdays, the rest of the week it’ll be $60.36. If it was a Leap Year it would be $60.35. Everyone knows that???

  4. penury on Mon, 26th Oct 2015 12:16 pm 

    I agree with Rockman, except that perhaps it will be $6.27. Unless the manufacturing section of the economy stages a large recovery the trajectory for prices appears to be downward. People can only utilize a small portion for driving. Manufacturing, shipping, transportation and war appear to be the major users. Well at least we still have war.

  5. Truth Has A Liberal Bias on Mon, 26th Oct 2015 1:23 pm 

    It seems to me that most of these price forecasts are based upon an assumption that supply is predictable/will stay constant and that in time demand recovery will move the price up.

    It also seems to me that the other way to move the price up is if supply falls. That variable depends on many factors, from KSA to Iran to USA shale.

    When the people who didn’t see the price decrease coming are now telling you how long the price decrease will last it’s time to ignore their articles. It’s just an endless stream of click bait to sell advertising.

    Most media is not interested in educating you or informing you. They just want your click.

  6. BC on Mon, 26th Oct 2015 2:58 pm 

    I suspect we’ll see the $30s before the $60s for WTI, and I won’t be surprised to see NYMEX gasoline test a buck, or perhaps lower.

    The world and US economy is effectively back into recession. However, instead of the historical pattern of decelerating from a peak-cyclical growth rate of 3-4% for real GDP and 2-2.5% per capita, we’re decelerating from 1% per capita since 2010 and ~0% since 2007-08.

    So, the recessionary deceleration will be largely imperceptible (especially for stationary eCONometric models), as the secular trend rate is well within the margin of error of the estimates for the GDP deflator, inventories, and import prices.

    Also, recall that the US eCONomy was in recession for 2-3 quarters in 2008 and 2001 before the stock market finally “got it” and rolled over hard and crashed. We’re at a simillar cyclical progression today as those previous periods.

    This is why there is a zero probability that the Fed will raise the funds rate for an indefinite period, and they are more likely than not to resume QEternity, perhaps even as soon as a surprise holiday announcement in their shift in policy.

  7. ghung on Mon, 26th Oct 2015 3:26 pm 

    Meanwhile I’m showing WTI back below $44, and natural gas a,, $2.07? Gosh….

    I topped my propane tank off Friday at $1.74/gallon.

  8. Plantagenet on Mon, 26th Oct 2015 3:28 pm 

    BC makes excellent sense in his post. Going from 1% growth into recession is rather different then going from 4% growth into recession. The decline is almost imperceptible.

    BC is also correct that the FED isn’t going to increase interest rates any time soon. We’ll see zero interest rates and maybe even negative interest rates before we’ll see the FED increase interest rates.

    This next recession may be a doozy!


  9. Boat on Mon, 26th Oct 2015 3:54 pm 

    What fracking produces has more to do with how much Iran and Iraq can develop and bring to the market. The consumer typically burns gasoline/diesel whether it is cheap or not. Supply and demand at with the cheapest development wins market share.

  10. shortonoil on Mon, 26th Oct 2015 5:00 pm 

    “Unless the manufacturing section of the economy stages a large recovery the trajectory for prices appears to be downward. “

    The long term price of oil is downward:

    This evaluation provides the maximum attainable price (not what the market price may be, that could be less), and does not use supply, or demand inputs. Supply, and demand are unknown quantities, and can only be determined after they have occurred. It uses the delivered per unit energy value of petroleum, which is an extensive and independent property of petroleum. It provides the upper boundary conditions for which the price of petroleum can not exceed without violating known laws of thermodynamics.

    The present price of oil is now about $20 below its upper boundary condition. This has undoubtedly resulted because of the monetary policy of the Central Banks. Excess liquidity injected into the system has allowed production through debt formation that would not have otherwise been economically feasible. ZIRP has reduced the operating cost for many producers by about $25/ barrel (the 6.3% interest rate spread from historical levels).

    To maintain the now insolvent banking system (insolvent because of their dependance on Mark to Myth practices) it is not likely that the Central Banks will substantially change their policies. For that reason alone we do not expect prices to return to their upper boundary limits before a significant crisis has developed in the petroleum industry. That is likely to occur within three years.

  11. Boast on Mon, 26th Oct 2015 6:30 pm 

    short, it’s only a crisis for those who spend the most money to drill and produce oil than the producers still making money at it.

    Nat gas went from over 1600 drilling rigs to less than 200 and produce much more product. So yea, it’s tough if you can’t compete. Go look that up. Baker Hughes.

  12. Davy on Tue, 27th Oct 2015 6:07 am 

    More energy bad debt on the way.

    “U.S. Natural Gas Falls Below $2 for First Time in Three Years”

    “Gas reaching $2 “definitely pressures the producers to cut back on investment, to cut back on drilling and leave a little bit of gas in the ground for later,” said Evans. “In terms of the big-picture, boom-or-bust cycle, we are in the bust phase.”

  13. dooma on Tue, 27th Oct 2015 8:51 am 

    which is great if you are looking at a nice rack.
    (sorry could not resist a bad pun)

  14. Kenz300 on Wed, 28th Oct 2015 9:07 am 

    The transition away from FOSSIL fuels continues…..

    Climate Change is real….. we will all be impacted by it…. we all need to take steps to reduce our use of fossil fuels.

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