Don’t expect oil to go above $US100 per barrel within the next decade.
The 12-member oil cartel OPEC has this grim forecast in a draft report presented to its staff last week that the Wall Street Journal read.
Here’s the Journal’s Benoît Faucon and Summer Said (emphasis added):
“The report, seen by The Wall Street Journal, predicts that oil prices will be about $US76 a barrel in 2025 in its most optimistic scenario, a reflection of OPEC worries that American competitors will be able to cope with low prices and keep pumping out supplies. It also contemplates situations where crude oil costs below $US40 a barrel in 2025.”
This appears to be OPEC’s latest admission that it has lost firm control over oil prices. Last Tuesday, influential Saudi Arabian oil minister Ali Al-Naimi told CNBC that the price of oil is not controlled by OPEC but is, “up to Allah.”
Oil prices started collapsing from their peak last June when the market was flushed with oil produced in America’s shale boom. Despite falling oil prices, OPEC agreed to maintain production at 30 million barrels per day in November, a move that sent prices even lower.
Oil below $US100 is not good for OPEC members; many of them are depending on oil to balance their budgets and fund existing projects.
West Texas Intermediate crude oil was last above $US100 per barrel in mid-July 2014 before beginning its rapid slide to as low as $US43 per barrel. On Monday, WTI was lower at around $US59.17 per barrel.
Since mid-March, we’ve seen a steady recovery that took WTI above $US60 per barrel last week for the first time since December.
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