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Will we see oil at $100 a barrel again?

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Brent crude has gained 23% to around $64 a barrel this year. Its gains have already surpassed the most bullish of forecasts, says Avi Salzman for Barron’s. Bank of America thinks crude will hit $100 a barrel “from time to time” over the next five years. Before 2014 crude regularly traded above $100. That era ended when US shale drillers began to pour millions of new barrels onto global markets.

There are two key factors currently capping oil below $100 a barrel. First, energy cartel Opec and ally Russia are currently withholding about seven million barrels per day (mbpd) of production to prop up prices; economic recovery this year will cause them to turn on the taps and flood the market. Second, the green-energy transition means that some analysts think the world may already have passed peak oil demand. The energy transition is “real” and welcome, but things are moving “glacially”, says Dylan Grice on themarket.ch. Bloomberg projects that electric vehicles “will only make up around 8% of the total fleet of passenger cars by 2030… The oil market will continue to play a central role” for decades.

A serious price spike could finish off crude sooner than that, reckons Ambrose Evans-Pritchard in The Daily Telegraph. Low prices and the rise of environmental, social and governance (ESG) investing have sent investment in new oil capacity plummeting: annual non-Opec investment is running at just 35% of pre-2014 levels – far too little to meet global demand.

As demand picks up over the next five years, that could send prices going as high as $150 a barrel. Above $100, oil becomes pricier than already existing green alternatives, delivering the coup de grâce to oil and sending producers spiralling. Paradoxically, the “greatest threat to Saudi Arabia and Russia over the next five years is a roaring bull market for crude oil”.

Moneyweek



5 Comments on "Will we see oil at $100 a barrel again?"

  1. DT on Sat, 6th Mar 2021 1:36 pm 

    “As demand picks up over the next five years, that could send prices going as high as $150 a barrel.” Yes lets see crude oil over $100 per. Hell for that matter lets make it over $150. Then we can watch the entire house of cards come crashing down for good! BWAHAHAHAHA.

  2. Cloggie on Mon, 8th Mar 2021 2:16 pm 

    Yes we will:

    https://www.api.org/news-policy-and-issues/blog/2021/02/24/is-the-world-about-to-see-an-oil-shortage

    “Is The World About To See An Oil Shortage?“

    Based on projected rising demand, the natural production decline from existing wells and decreases in drilling activity and industry investment – especially in the U.S. – the world’s oil needs could outpace production in 2022. An undersupply potentially could put upward pressure on costs, impacting consumers, manufacturers and, generally, any process that utilizes oil.

    And people who have no alternative are f*.

  3. Biden’s hairplug on Mon, 8th Mar 2021 3:10 pm 

    The coming juggernaut China:

    https://www.unz.com/freed/dispatches-from-the-new-cold-war/

    “Dispatches from the New Cold War”

    The good news: both the US and China had to share the gold medal Math Olympia 2019. The bad news, here is the US team:

    Vincent Huang, Luke Robitaille, Colin Tang, Edward Wan, Brandon Wang, and Daniel Zhu

    There was no John Smith in the Chinese team.

    The Chinese are VERY identitarian and have no use for the word racism, unless of course anti-racist means anti-white, then they’re are all onboard. At home, the Uigurs are in the Gulag.

    But there are still some in the West who think we can afford a battle with both China and Russia, where Russia clearly feels very uncomfortable in its “alliance” with China.

    But Washington will only accept Russia as a vassal, like it was between 1991-2000. Russia not interested and keeps fishing for entry in the Common European Home.

  4. makati1 on Mon, 8th Mar 2021 3:39 pm 

    Biden’s, we agree on this point. China and Russia as partners is the US’ worst nightmare.

    And to assume that they can take on both in a war is insanity. With hyper missiles, the war would be over the first day and the US would be gone.

  5. Cloggie on Thu, 11th Mar 2021 8:28 pm 

    “Gas Prices Exploding Across America“

    https://www.infowars.com/posts/gas-prices-exploding-across-america/

    $2/gallon = 44 euro cent/litre

    Gas prices in Europe are exactly FOUR times higher than in the US.

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