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Page added on February 6, 2013
Oil Prices
A while since we’ve looked at oil prices around here. The chart above shows the two main benchmarks – Brent and WTI – and the spread between them. These days Brent is a better indicator of global oil market conditions, as well as gas prices on the US coasts, while the spread of WTI to Brent is mainly measuring the fact that the boom in tight-oil production in the central US cannot be fully bought to market conveniently yet.
Brent prices have been in and around the $100-$120/barrel band since the beginning of 2011. For the last few months they’ve been rising and are currently somewhat above the 2011-2013 average. If the supply flatness of 2012 continues, I’d expect them to climb quite a bit more. However, it’s not clear to me whether that supply flatness will continue. A topic for future posts, I suppose.
4 Comments on "Oil Prices"
J-Gav on Wed, 6th Feb 2013 10:21 pm
Yeah, I suppose …
Not saying there won’t be a little downward movement in prices somewhere along the line but the general trend, considering the only important factors: energy density, flow rates, net energy and EROEI – all clearly indicate we’re in for a very rough ride.
John Symons on Wed, 6th Feb 2013 10:37 pm
Indeed, J-Gav. You can draw a trend line through that chart from $50/bbl Brent on 1.1.2005 to $100/bbl Brent on 1.1.2013. Variances in the actuals above that trend roughly balance out variances below it. That’s a rate of price increase a shade over 9% p.a.
BillT on Thu, 7th Feb 2013 1:41 am
JS, if the trend continues, that means a doubling of price in only 8 years or 2020. Oil at $220+ and gas at $7? $8? $9?
GregT on Thu, 7th Feb 2013 3:16 am
And if that trend continues to 2030, prices will quadruple from present. I don’t see that happening though. All current trends appear to be accelerating over time.