There's Just Too Much Oil In The World, Prices Headed To $20

oil bird tbi

Philip Verleger isn’t stepping back from his bold claim that oil with sink to $20 by year-end:

Bloomberg: A crude surplus of 100 million barrels will accumulate by the end of the year, straining global storage capacity and sending prices to a seven-year low, said Verleger, who correctly predicted in 2007 that prices were set to exceed $100. Supply is outpacing demand by about 1 million barrels a day, he said.

“The economic situation is not getting better,” Verleger, 64, a professor at the University of Calgary and head of consultant PKVerleger LLC, said in a telephone interview yesterday. “Global refinery runs are going to be much lower in the fall. If the recession continues and it’s a warm winter, it’s going to be devastating….”

“OPEC don’t realise the magnitude of the cuts they need to make,” which would total about a further 2 million barrels a day, Verleger added. “Storage is going to become tight. It’s not clear if there’s going to be enough storage available.”

While he was doing that, Goldman Sachs reiterated its own bold call for $85 oil by the end of the year. And analysts polled by Bloomberg say the price of oil will average $63 for the fourth quarter of the year.

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