Insurance Agency Singapore | Commercial Insurance and Personal Insurance

  • Products
    • Commercial Insurance
      • Work Injury Compensation
      • Public Liability
      • Foreign Worker Medical
      • Foreign Worker Bond
      • Fire/Burglary Insurance
    • Personal Insurance
      • Motor Insurance
      • Travel Insurance
      • Home Insurance
      • Personal Accident
      • Domestic Maid Insurance
  • Support
  • Contact Us
  • Blog
  • About Us

Get Ready for $10 Oil

22 February 2015 By Digital Curator Leave a Comment

Oil

Image via Flickr user Olle Svensson

At about $50 a barrel, crude oil prices are down by more than half from their June 2014 peak of $107. They may fall more, perhaps even as low as $10 to $20. Here’s why.

U.S. economic growth has averaged 2.3 percent a year since the recovery started in mid-2009. That’s about half the rate you might expect in a rebound from the deepest recession since the 1930s. Meanwhile, growth in China is slowing, is minimal in the euro zone and is negative in Japan. Throw in the large increase in U.S. vehicle gas mileage and other conservation measures and it’s clear why global oil demand is weak and might even decline.

Oil Prices

At the same time, output is climbing, thanks in large part to increased U.S. production from hydraulic fracking and horizontal drilling. U.S. output rose by 15 percent in the 12 months through November from a year earlier, based on the latest data, while imports declined 4 percent.

Something else figures in the mix: The eroding power of the OPEC cartel. Like all cartels, the Organization of Petroleum Exporting Countries is designed to ensure stable and above-market crude prices. But those high prices encourage cheating, as cartel members exceed their quotas. For the cartel to function, its leader — in this case, Saudi Arabia — must accommodate the cheaters by cutting its own output to keep prices from falling. But the Saudis have seen their past cutbacks result in market-share losses.

So the Saudis, backed by other Persian Gulf oil producers with sizable financial resources — Kuwait, Qatar and the United Arab Emirates — embarked on a game of chicken with the cheaters. On Nov. 27, OPECsaid that it wouldn’t cut output, sending oil prices off a cliff. The Saudis figure they can withstand low prices for longer than their financially weaker competitors, who will have to cut production first as pumping becomes uneconomical.

What is the price at which major producers chicken out and slash output? Whatever that price is, it is much lower than the $125 a barrel Venezuela needs to support its mismanaged economy. The same goes for Ecuador, Algeria, Nigeria, Iraq, Iran and Angola.

by A. Gary Shilling

See Full Story on bloombergview.com

Share this:

  • Facebook
  • Twitter
  • LinkedIn

Filed Under: Industry Tagged With: $10 oil, $10 oil price, oil price

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Categories

  • Domestic Maids
  • Golf
  • Happenings
  • Health
  • Homepage
  • Industry
  • Interesting Stuff
  • Products
  • Tips
  • Uncategorized

Contact Us

  • 1 Soon Lee Street #02-43, Pioneer Center, Singapore 627605
  • Tel: 68978226
  • Fax 68978086
  • Business Hours:
  • Mon – Fri: 8am – 6pm

Our Location

At the west side of Singapore, our office sits on the second floor of the building.

1 Soon Lee Street
#02-43, Pioneer Center
Singapore 627605

Our Products

  • Fire/Burglary Insurance
  • Foreign Worker Bond
  • Foreign Worker Medical
  • Public Liability
  • Work Injury Compensation
  • Domestic Maid Insurance
  • Home Insurance
  • Motor Insurance
  • Personal Accident
  • Travel Insurance

Find Out More

We would love to hear your insurance needs. Tell us all about it by filling up our contact form.

If not, give us a call at +65 6897 8226
or email us at enquiry@credence.agency

Copyright © 2023 | Credence Agency