Why are oil prices so low?

Maverick74 said:
The dollar is going through a major breakout that could last for years. This means just on the Dollar alone Oil could get cut in half again from these levels. Shale is more expensive but there is so much heavy crude in South America and Mexico trading at $20 discounts to WTI to meet demand. At some point you exhaust the cheap supply and all that is left is the expensive stuff and then you will see your costs go up. That's actually what Andrew Hall of Phibro fame is betting on far out on the curve in 2018 and 2019 although he took a lot of exposure off recently, or so he says.
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Could being the keyword here.
 
Sergio77 said:
Oil prices are low to avert another financial crisis.
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The last time they were at these levels or lower it was due to the financial crisis and the world economy slowing down.

Some are now arguing in this thread that oil prices aren't low either. Rather that they have been high preceding this.

So who knows...

Lot's of opinions here for sure. :)
 
Laissez Faire said:
The last time they were at these levels or lower it was due to the financial crisis and the world economy slowing down.

Some are now arguing in this thread that oil prices aren't low either. Rather that they have been high preceding this.

So who knows...

Lot's of opinions here for sure. :)
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The oil to gas ratio has been the norm for 50 years to interpolate value when compared in units of heat rates. And by that comparison oil is "obscenely" overvalued. No conspiracies are really needed at this time...
 
Maverick74 said:
The oil to gas ratio has been the norm for 50 years to interpolate value when compared in units of heat rates. And by that comparison oil is "obscenely" overvalued. No conspiracies are really needed at this time...
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Maybe that is true, but what will you say when or if oil prices start picking up again next year? :)
 
Laissez Faire said:
Maybe that is true, but what will you say when or if oil prices start picking up again next year? :)
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Eventually they will go back up but the ratio between natural gas and oil should fundamentally be within a certain range. So nat gas prices could trade a lot higher and therefore oil prices could go up with them. Ultimately empirical data shows us there is a very strong correlation to oil prices and emerging market growth. So if you buy into higher oil prices then you better be extremely bullish on risk assets and emerging market growth. I'm not quite as bullish and think we might enter another recession before we get the next uptick in the credit expansion cycle.
 
Price wars against US NG companies - slowed global economic growth justifies the aggressive undercutting of competition.
 
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