Oil Forecasts

Friday, October 9, 2009

Oil is now 88 dollars below its all time high and touches a 20 month low. Where is it headed now?

Boone Pickens Oil Forecast

Pickens predicts that price will recover to about $100 per barrel during 2009. "This is the worst credit crunch I've ever had," he said, adding, "We've been through them before; you just work your way through it." He predicts consolidation as the oil industry struggles to cope with the price plunge.

"I guess I'm kind of anxious to see the first offer for a company," he said. "We may be a few months away from it."

Jim Rogers Oil Forecast

"Whether oil costs 45 or 145 dollars, it doesn’t really matter. What does matter is that with oil, like with many other commodities, supply is decreasing while demand is increasing. In the long run this will result in a considerable increase in prices."

"The question is not if the price of a barrel of oil will increase again, but how expensive a barrel of oil will be eventually?"

"The oil supply will fall with 6 to 9 per cent each year, according to the IAE. The demand for oil will increase in China and developing countries. This has nothing to do with economy, the market is simple. It is simply the law of supply and demand."

The International Energy Agency Oil Forecast

The International Energy Agency, which advises industrialized nations on energy policy, warned on Thursday that the supply shortfalls that pushed oil prices into triple-digit territory this year are far from resolved, and could lead to a new period of high prices. As a result of higher prices and lower growth, the energy agency slashed its forecast for global oil demand by more than 10 million barrels a day over the next two decades. It now expects oil consumption to reach 106 million barrels a day in 2030, up from 86 million barrels a day this year.

But even with the lowered demand forecast, the agency warned that the period of lower prices may not last as producers fail to increase oil supplies to meet the developing world’s rising needs. It expects prices to average more than $100 a barrel through 2015, and possibly rise to $200 a barrel by 2030.

Credit Suisse Oil Forecast

The wildcard in global oil markets is China—and a looming economic slowdown there threatens to send global oil consumption backward next year for the first time since 1982.

That’s the take from Credit Suisse, which just slashed its 2009 crude oil forecast for the second time in a month. The bank now expects $60 oil next year, down from its recent estimate of $75, and oil at just $80 a barrel in 2010. That’s because China’s economy—especially the workshops on the coast—is taking a beating from the global economic slowdown, and that will elminate any fresh Chinese demand for oil next year.

Credit Suisse analysts forecast Chinese growth below 7% for the next three quarters, “the lowest levels of economic growth in China for many years.”

Rick Rule Oil Forecast

The oil price will go lower, the natural gas price will go lower. That will happen for a couple of reasons. The institutional investors who have taken speculative or hedge positions in those energy markets are out of money. They will be sellers; they will not be buyers. Reduced economic activity means reduced demand for energy. That one’s a no-brainer.

Looking a little bit further ahead, however, these are extraordinarily attractive businesses. They’re extraordinarily attractive businesses, again, perversely because of governments. Most oil in the world, strangely, is not controlled by oil companies. People think, if you read the popular media, that the world oil prices and the world oil supply is controlled by people like Shell and Exxon, British Petroleum, but that’s not the case. Most oil in the world is controlled by national oil companies and the governments that run the national oil companies do as good a job running the national oil companies as they do their societies.

And let’s look at the national oil companies, let’s look at the countries that they run: Iran, Mexico, Venezuela, Indonesia, Russia—not much cause for optimism. In fact, what occurs on a global basis with these national companies is that these national oil companies divert most of their free cash flows to the governments for social expenditures. In fact, every country that I’ve mentioned uses the free cash flow from the oil and gas business to subsidize domestic gasoline and energy consumption meaning that they are encouraging domestic consumption.

What is happening is that so much of the cash flow in these national oil companies is going to domestic and social expenditure that not enough of it is being reinvested in the oil and gas business. So, the production in these countries is really in terminal decline. It is my belief that in a three to five year timeframe and maybe sooner, several countries, which are prominent oil exporters, will no longer have oil for sale in world markets. I believe this will happen in Venezuela; I believe this will happen in Mexico. I believe this will happen in Indonesia. It may occur, surprisingly in Iran. The interesting thing about that is that those four countries control about 25% of the world’s supply of export crude. If you take 25% out of the world’s export crude supplies, you do an awfully strange thing to the oil price. And I think this is going to happen; I don’t think it may happen. I think it is going to happen. That will be very interesting.

Goldman Sachs Oil Forecast

Goldman Sachs Group Inc.'s commodity research analysts said in a report yesterday the ``downside risk'' to its year-end forecast of $70 a barrel for crude oil prices has increased amid signs of slowing emerging market demand.

Societe Generale Oil Forecast

Societe Generale SA, France's third-largest bank, slashed its 2009 oil forecast by more than $40 a barrel, its second reduction in a month. It lowered its projection for average prices in New York next year by 36 percent to $72.50 a barrel in a report yesterday, citing tumbling demand and the flight of financial investors from the commodities sector.

Martin King Oil Forecast

Yes, the oil market is ugly right now -- “We are projecting that global demand will contract by about 30,000 barrels per day in 2008, the first such decline since 1985,” the First Energy analyst said but it is going to get better soon.

“We think the biggest mistake that many on the Street are making is to have become far too negative on demand prospects in the medium-term and, more importantly, grossly overestimating the buoyancy of supply in 2009 and beyond"

Crude oil will pop back up to US$80 to US$90 per barrel in the second quarter of 2009, with “real potential” to return to triple digits in the second half of the year or maybe sooner.

“We see the wave of negative sentiment for oil demand as having gone too far for too long, and that the market has lost focus on many of the demand positives that have begun to emerge. We do not expect things to really get much worse than current near-term levels.”

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Forecasts for oil prices from the industry experts like Boone Pickens, Jim Rogers, IEA, OPEC, Credit Suisse, Goldman Sachs and many others.

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