• 6 minutes Corporations Are Buying More Renewables Than Ever
  • 17 minutes WTI @ 67.50, charts show $62.50 next
  • 23 minutes Starvation, horror in Venezuela
  • 22 hours Permian already crested the productivity bell curve - downward now to Tier 2 geological locations
  • 1 day Desperate Call or... Erdogan Says Turkey Will Boycott U.S. Electronics
  • 21 hours Renewable Energy Could "Effectively Be Free" by 2030
  • 22 hours Saudi Fund Wants to Take Tesla Private?
  • 1 day Mike Shellman's musings on "Cartoon of the Week"
  • 2 days Venezuela set to raise gasoline prices to international levels.
  • 2 days The Discount Airline Model Is Coming for Europe’s Railways
  • 1 day Pakistan: "Heart" Of Terrorism and Global Threat
  • 1 day Are Trump's steel tariffs working? Seems they are!
  • 2 days Scottish Battery ‘Breakthrough’ Could Charge Electric Cars In Seconds
  • 3 hours Hey Oil Bulls - How Long Till Increasing Oil Prices and Strengthening Dollar Start Killing Demand in Developing Countries?
  • 15 hours Why hydrogen economics does not work
  • 14 hours China goes against US natural gas
Alt Text

Oil Prices Jump As Saudis Cap Oil Supply

Oil prices rose on Tuesday…

Alt Text

Iran’s Latest Tactic To Save Market Share

Iran cut oil prices for…

Alt Text

Turkey Turmoil Drags Oil Down

While Turkey might not be…

Robert Rapier

Robert Rapier

More Info

Trending Discussions

Why Oil Prices Aren’t Dropping

I saw a humorous story a few days ago: Oil Should Be Around $10 a Barrel

The price of a barrel of oil would be closer to $10 if the commodity wasn’t traded as an investment instrument, given the record-high levels of U.S. oil inventories, Peter Beutel, president of Cameron Hanover, told CNBC Monday.

“I honestly think that if there were no investors using oil as an asset that the price of oil right now would be $10 or $15 or $18, but it wouldn’t be anywhere near where it is,” Beutel said.

First off, the cost of production for most producers is significantly higher than that. The easy, cheap oil is gone. That’s why we are drilling a mile deep for oil in the Gulf of Mexico. But the other reason that oil prices aren’t going down soon is because demand has been recovering. Courtesy of the EIA:

US Petroleum Demand
U.S. Petroleum Demand

That shows that petroleum demand has been steadily climbing for a year, and has recovered to levels last seen two years ago.

This one shows a similar story for imports, albeit with an even steeper rate of increase:

Crude Oil and Petroleum Production
Crude Oil Imports

It is hard to imagine oil prices softening with demand again rising, much less trading at $10/bbl. This is why I am not optimistic for an imminent recovery from the recession. Oil prices are at $75, and demand is rising. And we know what happens to oil prices as demand continues to climb…

By. Robert rapier

Source: R Squared Energy Blog




Back to homepage

Trending Discussions


Leave a comment
  • Anonymous on September 13 2010 said:
    Robert, the idea of oil selling for ten dollars is not stupic or ignorant, but pathetic. No logic reaches someone who writes something like that, nor the persons who buy it.
  • Anonymous on September 13 2010 said:
    oil has both real and psychological value. dollars now are just paper. no one of producers can stand 10 dollar a barrel.
  • Anonymous on September 13 2010 said:
    Oil should be around $40-$50/bbl; or approximately 10x-12x of HHgas. Presume that gas is always in perfect balance and, regardless of conventional thought, really does compete with oil via global economics [manufacturing... firing boilers, ethylene, etc).J

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News