85 comments on Tight storage may lead to huge oil price drop
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85 comments on Tight storage may lead to huge oil price drop
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What folks forget is that oil HAS to be a certain price to make it viable to even go drilling for oil. Bring down the price too far and the tar sands & deep water suddenly go offline.
The oil industry, like other businesses that "build and develop" things needs a certain dollar point to make it worthwhile. The market knows what that price is and it's not going to fall.
80 bucks in 18 months.
Offshore oil supply does NOT go offline when prices drop, especially not in deep water fields. Once committed oil companies race for first oil and produce at maximum to generate cash flow, regardless of the price. What goes off is spending on slowing natural field decline and marginal production onshore when the cost if operating the wells or drilling new ones is above revenues from oil or gas prices, e.g. shale gas in the USA. The major threat from falling demand, rising stocks and low prices is an accelerating global decline from old fields that will sooner or later swing the market into shortage instead of surplus. How soon or how late is hard to call, but it is not measured years but months.