Oil consumption will climb 16% to reach 116 million barrels a day in 2045, about 6 million a day more than previously predicted, the Organization of Petroleum Exporting Countries said today in its World Oil Outlook. India represents the biggest expansion in projected consumption, more than doubling its consumption to almost 12 million barrels a day, followed by China, with a gain of 4 million a day, or 26%.
Today’s Trend of the Week is Which is it? OK Growth in the U.S. or Not Great Growth Globally? The U.S. market is rallying and the rally even expand from the narrow nine stocks that have been driving up the indexes. The consensus is the U.S. economy will avoid a recession, the Fed will continue to pause rate hikes, and the U.S. economy as a whole is in decent shape. The problem is that the global economy presents a completely different story with asset values pricing in slowing growth. This shows up most clearly in oil prices, which have been in a downward trend. On June 13, West Texas Intermediate was selling below $70 a barrel, and Brent was down to 74.57. Goldman Sachs has cut its end-of-the-year oil price forecast by about 10%. This cut assumes continued lower demand from China and a supply glut, especially from Russia, as that country produces above agreed-upon caps in an effort to fund its war in Ukraine. If you own oil stocks right now, confirm that the ones in your portfolio can continue to make money at $70 a barrel (at least enough to cover dividends). I’d note the lowest cost source in the United States is in the Permian Basin. Companies like Pioneer National Resources and Devon Energy are focused on production from that region.
I’ve seen several comments on the site asking this question. I assume we’re talking about oil stocks in the short- and medium-term. In the long term, I think it’s clear that you should be thinking about selling these out of your portfolio at a profit (of course) whenever you can. Demand for oil will fall in the long-term–defining long-term as 5 years or more–or we can all count on figuring out how to survive 120-degree (Fahrenheit) heat. Today, August 5, is a good synopsis of what’s going on with oil and oil stocks in the short- and medium-term.
This morning the International Energy Agency cut it monthly forecast for crude oil demand by 100,000 barrels a day for 2017 and 2018. U.s. benchmark West Texas Intermediate fell 2.77% to $55.17 a barrel. (West Texas Intermediate has been slipping lower since it closed at $57.35 on November 6.) International benchmark Brent crude fell 2.82% to $61.38 a barrel.
Oil stockpiles have hit a record of almost 3 billion barrels on record supplies from Iraq, Saudi Arabia, and Russia.
