How Did We Get Here?
In part one of this article, we discussed how a better understanding of price dynamics can lead to a better understanding of the forces acting on both the short-term and long-term oil price. We continue this discussion to summarize how this understanding provided us an insight that prices were likely to drop, as well as, how our current understanding of price dynamics impacts our expectations for future prices.
In The Headlines
Christopher Melillo | Kaye/Bassman International
At the time of authoring this article, WTI for December 2015 last traded at $52.89 which is – $0.76 from prior settle. Should the futures hold, we are not expecting to rise above $50.00 until September. Along with this, according to a study by Oil & Gas Journal, currently planned capital expenditures for US producers is expected to drop 17% to $571 billion with an expected West Texas intermediate price of $70.00/bbl. However, the timeline to maintain or achieve a return to that pricing differs from company to company and leadership in many organizations may continue to recalculate additional expenditure cuts until pricing stabilization or sustained return to the WTI price which budgets were originally based against. Continue reading
Topic of Discussion
“It’s difficult to make predictions, especially about the future”
- Attributed to everyone from Niels Bohr to Yogi Berra
A barrel of oil today fetches less than $50, when only six months ago oil traded at over $100. How could such a drop in prices not have been anticipated? Actually, it was!