Oil Price Will Stall on FundamentalsLocation: Tokyo Oil prices are not going back to the levels of last summer. The prices are capped. The latest numbers from Credit Suisse show why. The financial crisis has created permanent destruction of demand growth. The expectation now is 1% growth in demand per year. Two contributors to this are:
From Credit Suisse The graph below from Credit Suisse shows where oil price needs to be to
achieve a 16% return on capital investing in new sources of supply, vs. the
amount of new supply available from these sources. To get to 90 MBD can be
done with the more traditional projects that are profitable even when oil is
under $70 per barrel (and certainly under $100).
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