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There’s a Good Chance Oil may Not Rebound

There's a Good Chance Oil may Not ReboundGold Silver Reports — There’s a Good Chance Oil may Not Rebound — Crude Oil prices are hovering in the mid$40s per barrel, and hopes of a rebound have once again been delayed. The International Energy Agency’s September Oil Market report predicts that the supply demand equation might not come into balance until next year, suggesting another year of low oil prices. But what if oil prices never rebound?

The question seems ridiculous, not only because the oil markets always go through booms and busts, but also because demand continues to rise. Supplies are also falling from high cost areas, ensuring that the supply overhang will eventually be erased.Moreover, the oil industry has made unprecedented cuts in spending on exploration and development.

But the world is But the world is still oversupplied with oil, and the recent ramp up in production from Opec could lead to low oil prices for a few years. Libya is set to bring back around 600,000 barrels per day, and Nigeria has already returned somewhere between 200,000 and 300,000 barrels per day of interrupted supply. Production in the US has also levelled off over the past month at 8.5 million barrels per day, after nearly 18 months of declines.

The IEA expects global supplies to exceed demand through next year, and inventories to continue to build through 2017. Crude oil and refined product inventories are only slightly down from record levels, and will take a few more years to get worked through.

All of that is to say there is a good chance that ample supplies could ensure relatively low oil prices for several years, perhaps as long as towards the end of this decade.  — Neal Bhai Reports

There’s a Good Chance Oil may Not Rebound

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  • Ajay Tripathi

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