WHERE IS THE OIL PRICE GO­ING?

Finweek English Edition - - IN THE NEWS -

Hedge fund man­ager Pierre An­durand of An­durand Cap­i­tal, who pre­dicted the 2008 oil spike and sub­se­quent crash, told the Fi­nan­cial Times in early Septem­ber that he be­lieves oil can fall to as low as $25 to $35 a bar­rel this year, with the global mar­ket to re­main over­sup­plied in 2016 and 2017.

Sa­sol is more bullish, fore­cast­ing an oil price of $50 to $60 for the fi­nan­cial year to end June 2016, price lev­els Con­sta­ble de­scribes as “sus­tain­able”. Vi­tol Group, the world’s l argest in­de­pen­dent oil trader, is pre­dict­ing prices at be­tween $40 to $60 a bar­rel into 2016, Bloomberg re­ported.

“$25 to $ 35 is not a sus­tain­able num­ber. Heck, if it goes down to $25 or $35, I’m go­ing to buy more Sa­sol shares. [. . .] Be­cause l onger term, [to­wards the] end of this decade, we’re all go­ing to be mak­ing a lot of money in energy. You think of the hun­dreds of bil­lions of dol­lars that have been pulled back i n cap­i­tal i nvest­ment f rom the ma­jors and our­selves − ev­ery­body for that mat­ter – there’s noth­ing go­ing on right now other than projects that are al­ready in place.” Con­sta­ble says prices will star t “turn­ing up” by late 2017 as out­put from non-Opec coun­tries de­cline by 10m bar­rels a day by the end of 2018. Adding con­ser­va­tive de­mand growth pro­jec­tions, 15m bar­rels a day will be re­quired in this time frame. Prices will con­tinue to “turn up through the end of the decade, which is per­fect for us be­cause the cracker [un­der con­struc­tion i n Louisiana] comes online and we’ll see higher mar­gins for our eth­ane-based chem­i­cal prod­ucts, ver­sus naph­tha-based feed­stocks in Europe”.

The wild­card is what Opec will do about pro­duc­tion, says Con­sta­ble. “If you look at most of those coun­tries – where they are on their cost of pro­duc­tion and their na­tional bud­gets – they’re all in a world of pain. And they’re get­ting a lit­tle more noisy; they can’t take it much longer. So the wild­card would be − maybe not in the next meet­ing [De­cem­ber] but the meet­ing af­ter [around mid-2016] - some type of pro­duc­tion quota and a cou­ple mil­lion bar­rels [cut] just to show some faith in the oil price firm­ing up.”

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