In energy news this month traders and major companies can prepare themselves to see oil prices staying low from now and up for a decade. There are a few factors behind this as well. The Chinese economy is slowing down tremendously and the U.S shale industry is providing a cap on any trading rallies.
It’s going to be difficult to see there being a dramatic price increase any time soon or in the next decade. Prices will eventually bounce back that is a given as the oil industry is inherently a boom and bust cycle. Though it’s not likely any thing will go past around $50 per barrel in the upcoming ten years. Taking a major company as an example to look at is Brent Crude, used as a global benchmark that has been trading at around $33.00 per barrel in early February of 2016.
The longest stretch of low oil prices hasn’t been since the mid 1980’s to late 1990’s. A lot of analysts feel that this is exactly what is going to happen again in the next 10 years seeing another streak of low prices.
Outlook for the Future
Vitol trades around 5 million barrels a day and can cover the oil needs of multiple countries just by itself. An executive here believes that the price per barrel is going to only level at around $45 to $50 a barrel.
The foreseeable future doesn’t see much in the realm of triple digit oil prices again. This served the Middle Eastern countries and large companies in the United States like Exxon Mobil. The problem right now for prices that is, is the fact that there is so much supply out there of crude oil while at the same time the economy is shifting to utilize that energy better, using less of it.
The combination of these two factors is what has been driving these prices down. That’s why some believe that oil will never even reach $100 again. The biggest demand of oil came from places like China where there is a drastic transitional change in the economy and way of doing things.
There’s also the fact that Iran is entering the market and emerging markets are slowing down not requiring more oil. On top of all of this is OPEC that in December dropped any form of production limits.
That means that any major country or companies part of the Oil cartel were no longer forced to stop producing and selling off more oil. This is partly due to new countries and places like the United States getting into the game and a way to drive them out of the competition.
On top of this are new methods are getting oil out of the ground and better more efficient ways to refine it. All of these separate economic forces are bringing the price down and keeping it there as well making for the next long streak of low oil prices.