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Page added on October 21, 2018
Goldman Sachs: Oil Unlikely To Reach $100
Crude oil is unlikely to reach US$100 a barrel as various analysts have warned, Goldman Sachs’ chief of commodities Jeffrey Currie told S&P Global Platts in an interview. This is not the first time the analyst has countered the dominant sentiment: in September, Currie also said the chances of Brent hitting US$100 were slim although not impossible.
“We’re not saying $100 oil cannot happen. It’s not our base case nor do we think it’s very likely,” Currie said, adding “sustainable loss in all of Iran’s oil exports for an extendable period of time” had to emerge for the bullish predictions to become a reality.
The analyst went on to detail the reasons for this cautiousness: in addition to indications that Iran’s oil exports will not fall to zero—and one might add they won’t even fall to half what they were before, at least not immediately—production is growing. Saudi Arabia, if we are to believe self-reported figures, has been raising its production faster than many expected, strengthening hopes that there will be enough supply even after U.S. sanctions against Iran kick in.
“In the last four months we have seen a 20% rise in drilling in Saudi Arabia, you have already lost 700,000 b/d of Iranian exports and inventories built, which tells you there is already a lot more oil in the market,” Currie said.
And production from other OPEC members has been growing or, in the case of Libya, stabilizing, which also adds fuel to the bearish case for oil prices, supported by downward revisions of demand by the International Energy Agency and OPEC itself.
“Our base case is for a modest decline in inventories in the fourth quarter, which will likely keep prices somewhere around $80/b,” Currie told S&P Global Platts, reiterating a previous stance in which the Goldman Sachs commodities department had estimated that Brent prices will remain range-bound between US$60 and $80 during the last quarter of the year.
3 Comments on "Goldman Sachs: Oil Unlikely To Reach $100"
Anonymous on Sun, 21st Oct 2018 9:44 am
The strip is backwarded (lower price in the future). So going counter to a $100 prediction is not so radical. It’s reasonable.
Antius on Mon, 22nd Oct 2018 11:46 am
In light of recent potential for oil supply disruption, I have been thinking about alternative fuels. Many options have been discussed – biofuels, hydrogen, cryogenic air, battery-electric, rail in road, etc. I have been thinking recently about low-pressure compressed air as a storable energy source for short range vehicles.
This piques my interest largely because it is easy to produce using mechanical compressors that can be built by hand; reasonably efficient and the systems involved also appear to be relatively simple at all ends. The catch is that energy density is low at about 2.4MJ/m3 for air compressed to 10bar. This severely limits the range of any motive applications. But at such low pressures, low speed piston compressors are 75-90% efficient.
A simple piston compressor can be coupled directly to a (homemade?) wind turbine without the need for intermediate electricity generation.
As a power source for equipment, most pneumatic motors are inefficient compared to electrical alternatives. However, they are simple enough that air tools could be made locally by craftsmen with reasonably well equipped machine shops. For vehicles, air turbines may be 65 – 75% efficient, compared to 25% efficient for an IC engine on a car. I calculated the efficiency of a New Holland tractor engine at high horse power to be about 25% in terms of horse-power hours delivered per unit of fuel energy.
Could we farm using compressed air to power farm vehicles? One of the most energy hungry operations would appear to be ploughing. Ploughing to 8″ depth requires 24.4HP-hours per acre (66.75MJ/acre).
A New Holland diesel powered tractor would consume 267MJ of fuel energy per acre. If an air engine achieves an efficiency of 50% rather than 25%, then some 134MJ/acre of compressed air would be needed. If a tractor can carry some 4m3 of compressed air, it would plough 0.072 acres (288m2) before recharging. If the plough is 4m wide, that represents a run of no more than 72m across the field between recharging the tank. A carbon steel tank with design factor of 3.5, would weigh 430kg, which would appear to be a tolerable addition to the weight of the vehicle.
On a compressed air powered farm, fields would likely be long and narrow and we would run air lines along each side of the field to allow a tractor or harvester to be recharged at the end of each run. I think it could be made to work. But it would imply more man-hours as the driver would need to exit the cab at the end of each run to recharge his tank from a manifold in the air line running up the field. In many ways it is well suited to a compressed air engine, whose efficiency can be optimised to a specific speed and torque range. I like the idea of being able to power all operations on a farm using a wind turbine built and owned by the farmer himself. A very Amish solution.
Antius on Mon, 22nd Oct 2018 12:27 pm
I seem to be having trouble posting anything containing a lot of links, so I am posting without them at present.
LP compressed air could also power a bus. Electric buses have been built with energy consumption of 1.2kWh (4.3MJ) per km. DC electric motors are 80% efficient. Assuming 60% efficiency for an air turbine powering a bus; a single storey bus would consume some 5.76MJ of compressed air per km travelled.
A standard bus is about 2.5m wide and 10m long. Let us assume a 10bar compressed air tank 1m deep mounted in the roof. This would contain 25m3 of compressed air, allowing a range of 10.4km between refilling. The bus would refill at stops along the route, provided they were no more than 10km apart. If refilling takes a few minutes, then bus average speed might be reduced by 10-20%, although some time is always needed for passengers to alight.