2018_11_30 — “Oil Prices Should Recover”

Oil Prices Should Recover

Oil prices should recover

  • The International Energy Agency (IEA), in their recent annual World Energy Outlook sees an oil supply crisis in a few years and a supply shock in early 2020
  • Oil prices will receive a partial fix at OPEC’s meeting on December 6; they may institute supply cuts of 500,000 barrels per day on December followed by another 500,000 b/d in January
  • Saudi Arabia needs approximately $88 per barrel to balance their budget and have stated they want at least $80
  • Oil drilling capital expenditure (capex) cuts will catch up with us in the second half of 2019; there is no spare capacity
  • IMO 2020 (the International Maritime Organization’s upcoming limit on sulfur content in fuel) will force all cargo ships to stop using high sulfur diesel (a petroleum bi-product) and switch to regular diesel, which will increase diesel demand and cause a one-time step up in demand for oil/diesel in the back half of 2020
  • Russian production rolls over in 2021
  • Forays and success percentages have both decreased the last few years for traditional offshore and onshore oil searches



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Michael Ashley Schulman

Michael Ashley Schulman


Avid traveler and art fan, also Partner & Chief Investment Officer @Running Point Capital, a multifamily office and ultra high-net-worth money-management firm