Morgan Stanley and Goldman Sachs about 'What Happened with the Oil Price Collapse'
3 July 2015, 13:11
Morgan Stanley Exits Oil
Falling prices have impacted heavily on investments in the commodities markets. Many companies are now steering well clear of commodities on the whole. More and more of the big companies are now staying away from commodities trading, but this has paved the way for companies like Castleton Commodities International to become one of the major players in the industry. Of equal importance is the fact that analytical data on commodities trading is now more difficult to come by. Since so many of the analysts that conducted their research are no longer physically involved in commodities trading, there is room for new players to enter the market.
Goldman Sachs
Goldman Sachs has been pessimistic about U.S. oil producers re-entering the market now that the oil price has increased over $60 per barrel. What is likely closer to the truth is that U.S. oil companies will start entering the market when the price of WTI Crude and Brent Crude approaches $70 per barrel or more. And that will likely be insufficient to get oil production pumping at full capacity. While production of oil has flattened out, and will drop off, oil inventories are also falling at this time.
At this time, the rig count remains unchanged. As the number of operational wells continues to decrease so the supply of oil will decline too. This will then assist in further driving up prices. It is possible that the price will stabilize in the $70 – $80 range, making it uncomfortable for consumers in the U.S.
Prices will be unlikely to hold if oil wells increase their production when prices rise. By the middle of 2016, it is possible that cheap oil will no longer hold and prices will rise. If oil prices are going to rise, falling inventories and fewer oil wells in operation must come to pass. What is clear is that global oversupply has deteriorated and demand is generally weak. Market movements do not appear to be based on fundamentals, but they will win out in the end!
Falling prices have impacted heavily on investments in the commodities markets. Many companies are now steering well clear of commodities on the whole. More and more of the big companies are now staying away from commodities trading, but this has paved the way for companies like Castleton Commodities International to become one of the major players in the industry. Of equal importance is the fact that analytical data on commodities trading is now more difficult to come by. Since so many of the analysts that conducted their research are no longer physically involved in commodities trading, there is room for new players to enter the market.
Goldman Sachs
Goldman Sachs has been pessimistic about U.S. oil producers re-entering the market now that the oil price has increased over $60 per barrel. What is likely closer to the truth is that U.S. oil companies will start entering the market when the price of WTI Crude and Brent Crude approaches $70 per barrel or more. And that will likely be insufficient to get oil production pumping at full capacity. While production of oil has flattened out, and will drop off, oil inventories are also falling at this time.
At this time, the rig count remains unchanged. As the number of operational wells continues to decrease so the supply of oil will decline too. This will then assist in further driving up prices. It is possible that the price will stabilize in the $70 – $80 range, making it uncomfortable for consumers in the U.S.
Prices will be unlikely to hold if oil wells increase their production when prices rise. By the middle of 2016, it is possible that cheap oil will no longer hold and prices will rise. If oil prices are going to rise, falling inventories and fewer oil wells in operation must come to pass. What is clear is that global oversupply has deteriorated and demand is generally weak. Market movements do not appear to be based on fundamentals, but they will win out in the end!
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