Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
GDX Gold Stocks ETF - 25th June 19
What Does Facebook’s LIBRA New Crytocurrency Really Offer? - 25th June 19
Why Bond Investors MUST Be Paying Attention to Puerto Rico - 25th June 19
The Next Great Depression in the Making - 25th June 19
The Bad News About Record-Low Unemployment - 24th June 19
Stock Market New High, but…! - 24th June 19
Formula for when the Great Stock Market Rally Ends - 24th June 19
How To Time Market Tops and Bottoms - 24th June 19
5 basic tips to help mitigate the vulnerability inherent in email communications - 24th June 19
Will Google AI Kill Us? Man vs Machine Intelligence - 24th June 19
Why are Central Banks Buying Gold and Dumping Dollars? - 23rd June 19
Financial Sector Paints A Clear Picture For Stock Market Trading Profits - 23rd June 19
What You Should Look While Choosing Online Casino - 23rd June 19
INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - 22nd June 19
Here’s Why You Should Drive a Piece of Crap Car - 22nd June 19
How Do Stock Prices React to Fed Interest Rate Cuts? - 22nd June 19
Gold Bull Market Breaking Out! - 21st June 19
Post-FOMC Commentary: Delusions of Grandeur - 21st June 19
Gold Scores Gains as Draghi and Powel Grow Concerned - 21st June 19
Potential Upside Targets for Gold Stocks - 21st June 19
Gold Price Trend Forcast to End September 2019 - 21st June 19
The Gold (and Silver) Volcano Is Ready to Erupt - 21st June 19
Fed Leaves Rates Unchanged – Gold & Stocks Rally/Dollar Falls - 21st June 19
Silver Medium-Term Trend Analysis - 20th June 19
Gold Mining Stocks Waiting on This Chart - 20th June 19
A Key Gold Bull Market Signal - 20th June 19
Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - 20th June 19
Investing in APPLE (AAPL) to Profit From AI Machine Learning Stocks - 20th June 19
Small Cap Stocks May Lead A Market Rally - 20th June 19 -
Interest Rates Square Minus Zero - 20th June 19
Advice for Financing a Luxury Vehicle - 20th June 19
Stock Market Final Blow Off Top Just Hit… Next Week Comes the FIREWORKS - 20th June 19
US Dollar Rallies Off Support But Is This A Top Or Bottom? - 19th June 19
Most Income Investors Are Picking Up Nickels in Front of a Steamroller - 19th June 19
Is the Stock Market’s Volatility About to Spike? - 19th June 19
Facebook's Libra Crypto currency vs Bitcoin: Five Key Differences - 19th June 19
Fed May Trigger Wild Swing In Stock Index and Precious Metals - 19th June 19
How Long Do Land Rover Discovery Sport Brake Pads Last? - 19th June 19
Gold Golden 'Moment of Truth' Is Upon Us: $1,400-Plus or Not? - 18th June 19
Exceptional Times for Gold Warrant Special Attention - 18th June 19
The Stock Market Has Gone Nowhere and Volume is Low. What’s Next - 18th June 19
Silver Long-Term Trend Analysis - 18th June 19
IBM - Watson Deep Learning - AI Stocks Investing - Video - 18th June 19
Investors are Confident, Bullish and Buying Stocks, but… - 18th June 19
Gold and Silver Reversals – Impossible Not to Notice - 18th June 19
S&P 500 Stuck at 2,900, Still No Clear Direction - 17th June 19
Is Boris set to be the next Conservation leader? - 17th June 19
Clock’s Ticking on Your Chance to Profit from the Yield Curve Inversion - 17th June 19
Stock Market Rally Faltering? - 17th June 19
Johnson Vs Gove Tory Leadership Contest Grudge Match Betfair Betting - 17th June 19
Nasdaq Stock Index Prediction System Is Telling Us A Very Different Story - 17th June 19
King Dollar Rides Higher Creating Pressures On Foreign Economies - 17th June 19
Land Rover Discovery Sport Tailgate Not Working Problems Fix (70) - 17th June 19
Stock Market Outlook: is the S&P today just like 2007 or 2016? - 17th June 19

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

Crude Oil Forecast 2008 to Hit $150 a Barrel

Commodities / Crude Oil Dec 27, 2007 - 01:35 AM GMT

By: Money_and_Markets

Commodities

Best Financial Markets Analysis ArticleSean Brodrick writes: In 2008, we're going to hit an important milestone. In the New Year the world is going to start using oil at a rate of more than 1,000 barrels PER SECOND!

According to the International Energy Agency, global oil demand will average 87.8 million barrels per day (bpd) in 2008, up from 85.7 million bpd in 2007. At 87.8 million bpd, we'll use 1,016 barrels per second — a sonic boom of energy use.


I also think 2008 is going to be the year we finally see triple-digit oil prices. More on that in a moment. First ...

The White House Is Stockpiling Oil! The Question Is, "Why?"

Since August, the Bush administration has been adding 50,000 barrels a day to the Strategic Petroleum Reserve — the nation's emergency oil stockpile — with plans to kick up the pace to 70,000 barrels a day by the end of January.

That U.S. oil tank of last resort now contains 695 million barrels of oil — enough to keep the American economy running for just 56 days if imports were suddenly cut off.

The federal government has been aggressively buying up the world's supply of light sweet crude at a time when crude is selling for over $90 per barrel.

And this binge buying has added as much as 10% to the price of crude, an oil consultant told a Senate panel recently. What's more, in the recent energy bill passed by Congress, President Bush asked — and received — authorization to DOUBLE the size of the Strategic Petroleum Reserve.

My question — what does the Bush administration know that would make them so eager to add to the Strategic Petroleum Reserve when prices are so high? What are they afraid of?

Maybe this chart holds a clue ...

The chart comes from OPEC's December Monthly Oil Market Report . As you can see, crude oil prices dropped in both September 2005 and 2006 (the green and pink lines) along with seasonal demand. But this year that's not happening. As the red circle clearly shows, demand is so strong this year that prices are gushing higher, not lower.

In other words, America is so hooked on oil that higher prices aren't weaning us off our addiction. And this comes at a time when U.S. crude inventories are near their lowest levels in years.

That Means We're More Vulnerable Than Ever to an Interruption of that Oil Supply!

Here are some facts that will keep you awake at night ...

  • America is the world's largest consumer of oil, guzzling more than 7.5 billion barrels per year. We import more than half the oil we use, and that amount is rising.
  • More than 81% of the world's discovered and useable oil reserves come from just 10 countries. And 30% of the world's oil is in three of those countries — Iraq, Kuwait and Saudi Arabia.
  • The world consumes an astonishing 173 billion barrels of oil every 2.4 years. At the same time, we find enough new oil to supply just 3% of that.

So, just to keep prices stable over the next decade, we're going to have to find a couple more fields the size of Ghawar — the biggest oil field in Saudi Arabia ... and the world.

Here Are Three Forces That Will Squeeze Oil Prices Even Higher

Most people know a terrorist attack, a war in the Persian Gulf, or a natural disaster would cause oil prices to rise.

But there are other fundamental forces that will drive the price of oil higher relentlessly, even without a headline-grabbing catastrophe. Let's look at three of them ...

Force #1: A Thirsty World. Despite economic storm clouds on the horizon in the U.S., the global economy is growing at about 4.5% per year. From Brazil to Singapore, business is booming and incomes are rising.

The world's population is trading bicycles for cars, and global oil demand can't keep up. With 14,000 more cars on the road each day, China's oil demand alone is expected to rise at least 5% this year, according to the IEA.

As a result, the International Energy Agency (IEA) projects in its Medium Term Oil Market Report that global oil demand will grow 2.2% a year, on average. By 2012, demand should reach 95.8 million barrels per day (bpd) vs. 85.7 million bpd this year.

At the same time, spare capacity — almost all of which is in Saudi Arabia — is going to vanish like a mirage in the desert.

Even worse, the IEA expects supply increases from non-OPEC oil producers and biofuel producers to start dwindling around 2009.

All that boils down to an ugly picture from the IEA: The world's oil demand growth is going to start outpacing supply growth by 2010!

Force #2: Slipping on the Oil Field Treadmill. The IEA has more gloomy news for us: We're getting between 3% and 4% LESS out of existing oilfields every year. Mature producing areas and many recent deepwater projects are declining at even sharper rates — 15% to 20% annually!

All told, the oil industry needs to add three million bpd of new supply each year just to offset declines in existing fields.

But the oil majors are having trouble finding oil. For example, last year was the first time — EVER — that Exxon didn't replace its reserves through its own drilling, according to Oppenheimer research.

Force #3: Oil Exporting Nations Need More of Their Own Product. The economies of many big oil-exporting countries are growing so fast that their domestic need for energy is sucking up their exports. Experts say the sharp growth, if it continues, means several of the world's most important suppliers may need to start importing oil within a decade.

OPEC member Indonesia has already started importing more oil than it exports ...

Mexico could be doing the same within five years ...

And domestic consumption in Kuwait, Saudi Arabia and Iran is soaring!

According to a report from CIBC World Markets, Russia, Mexico, and OPEC members will cut crude exports by as much as 2.5 million barrels a day by the end of the decade. That is MORE than the current spare capacity in the oil markets.

When OPEC recently opted to freeze output levels it argued that the global market for crude oil was "well-supplied."

But maybe the real reason was that OPEC just didn't have much more to sell.

My Forecast: We Could See Oil Hit $150 a Barrel in 2008

The Energy Information Administration recently told the U.S. Senate that crude should average $85 per barrel in 2008 as fundamentals tighten ...

Goldman Sachs said it could hit $105 ...

But I'm setting my sights a little higher: I think we could see prices spike to $150 a barrel next year!

That kind of a jump might not stick around very long. But as I just showed you, all the fundamentals are in place for oil to hit — and maintain — triple-digit prices next year.

In fact, I believe the only thing that could derail higher prices is a stiff recession in the U.S. And central banks around the world are working hard to prevent that.

Our own Federal Reserve is throwing everything but the kitchen sink at the markets, and the Bank of England and European Central Banks are doing the same.

How You Can Play The 2008 Oil Boom

The oil majors are boosting their exploration spending to an estimated $370 billion next year. That means some undervalued oil exploration and production companies are on the launch pad.

That's precisely why I'll be recommending some of them to my Red-Hot Resources subscribers very soon.

Of course, small-cap, early-stage companies carry both higher risk as well as higher reward.

If you prefer more diversified investments, you can always buy the Energy Select SPDR (XLE) or one of the other energy sector ETFs that are stuffed with larger-cap oil & gas companies.

But whatever you do, get ready to watch oil prices in 2008. I think it's going to be a heck of a show.

Good luck and good trades,

Sean

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

John
31 Dec 07, 13:32
Re: The Question Is, "Why?"

The answer is simple: Bush's global and domestic buddies all get richer the higher oil goes in price.

This ain't particle physics, folks.


Viral
18 Jun 08, 00:28
crude $150

now also u think that it will crude will Hit $150 a Barrel


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules