Todd Bennington, Kingdom Exploration Media
In a recent article published at oilprice.com, petroleum geologist Art Berman modifies his prior conservative stance on the likelihood of continued significant oil prices increases, writing that West Texas Intermediate (WTI) prices between $60 and $70 per barrel are almost certain early next year and could very well rise above $70.
Some of the important takeaways from Berman’s article include the following:
• U.S. inventory oversupply is ending due to a combination of increased exports of crude oil and increased domestic consumption.
• Increased oil exportation is the result of an increased price spread between Brent and WTI, allowing U.S. exports to be sold abroad at prices lower than international averages but higher than what they can be sold for domestically. Also, U.S. refineries tend to prefer heavier crudes over WTI.
• Increased consumption primarily from vehicle usage has contributed to the draw down in inventory. It is questionable whether such consumption can continue in the long run as increasing gas prices will discourage consumption by drivers. According to Berman, WTI at $70 a barrel would result in gasoline costing an extra $1 per gallon.
• Higher oil prices are good for oil companies but bad for consumers and can stifle general economic growth both globally and domestically.
• Berman suggests that tight oil plays do not have sufficient reserve potential to meet global supply needs and that will mean more reliance on deep-water projects, which are expensive and have longer development timelines.
Read Berman’s article at https://oilprice.com/Energy/Oil-Prices/Can-WTI-Hit-70-In-2018.html.