Crude Oil Breakevens by Country:
The Current Organization of the Petroleum Exporting Countries (OPEC) oil breakevens need to balance 2015 budgets based on IMF projections.
At $40 a barrel, major shale formations of U.S. production are below their respective breakevens.
Consumption:
The vehicle miles traveled in the United States were 3.7% higher year to date in September than the prior year according to Bloomberg. As gas prices decrease, consumption should increase and result in higher demand during the summer of 2016.
What to expect from oil prices going forward?
I believe oil prices will continue to be under pressure in 2016 as OPEC continues to keep their foot on the gas. Falling rig counts should help oversupply concerns in the near-term, but I still think the glut is unfortunately here to stay. I don’t think we will see the $70 crude oil prices next year that some experts are calling for unless there is some type of geopolitical event. I believe we could possibly trade as high as $60 a barrel barring a pickup in global demand and China growth surprises to the upside next year. I do think we will settle under $40 a barrel and could trade as low as $30 a barrel if global growth continues to slow. I also think the playing field will be level as prices move lower, which will put aside the need for electric/hybrid cars. I still think the future will be electric/natural gas motors and I am in favor of new technologies to help generate cleaner emissions and reduce cost to the consumer.
On a positive note, Thanksgiving gas prices will be the cheapest since 2008. According to AAA, “more than half of U.S. stations are selling gas for less than $2 a gallon.” “GasBuddy projects the national average will be 1.99 per gallon, nearly 80 cents per gallon cheaper than last year and $1.29 per gallon cheaper than 2013”. (CNN)
Thanks for reading and I hope you all had a happy Thanksgiving.
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