Friday, June 9
Whither the price of petroleum?
That is a pretty chilling and not-so-subtle threat to ramp up production if prices continue to flounder. Indeed, Russia is preparing for lower prices ahead. “We’re actually ready to live forever with the oil price at $40 or below,” Russian Economy Minister Maxim Oreshkin said in a Bloomberg TV interview at the St. Petersburg International Economic Forum on June 1. “All macroeconomic policy is now based on the assumption of the oil price of $40.”The above passage is from Oil Price's "Is $50 Oil Still Realistic?" published yesterday. The analysis, which bears close reading, ends with these observations:
Taken altogether, the end result could be that oil gets stuck in the mid-$40s in the near run, rather than gradually rising beyond $50 and closer to $60 as previously expected.
“The worry in the market is that the overhang is definitely not going to be taken care of,” Gene. McGillian, research manager at Tradition Energy, told the WSJ. “Unless OPEC wants to do something else, the idea of $50 or $55 oil is basically not realistic.”As to what "something else" might be for OPEC, I have no idea.