Thursday, January 22, 2015

Davos Oil Barons Eye $150 Crude as Investment Slump Incubates Future Crunch

Roller coaster move in prices is destructive for the oil industry and is leading to investment cuts that may store up serious trouble for the future
by Ambrose Evans-Pritchard

Rampant speculation by hedge funds and a rare confluence of short-term shocks have driven the price of oil far below its natural clearing level, coiling the springs for a fresh spike this year that may catch markets badly off-guard once again.
“The price will rebound and we will go back to normal very soon,” said Abdullah Al-Badri, Opec’s veteran secretary-general. “Yes, there is an over-supply, but fundamentals don’t justify this 50pc fall in price.”
Experts from across the world – from both the West and the petro-powers – said the slump in fresh investment in 2015 is setting the stage for a much tighter balance of supply and demand, and possibly a fresh oil crunch.
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