OIL’S MAGIC NUMBER
Not too high… not too low… what is the best price for oil?
As crude plummets 30% in 2 months, consumers cheer, but the industry worries.
The debate as the world’s largest energy producers meet.
Oil’s Slippery Slope
- What? Oil traded at 4-year high in October at $76/barrel and the talk at that time was that $100/barrel was next. Today, it’s trading below $50/barrel.
- Why? There’s too much oil. U.S. crude inventories have climbed 10-straight weeks to the highest level in a year, just as concerns grow over a global economic slowdown with less oil demand.
“Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! …Thank you to Saudi Arabia, but let’s go lower!"
President Trump tweet on Nov. 21st
What is the Perfect Price?
Goldman Sachs warns $50/barrel oil is not good for America, instead says a $65 to $70/barrel range is best for all.
“When you’re in that level it’s not too high & damaging the consumer, but at the same time, it creates a stable environment for the industry.”
Jeff Currie, Goldman SachsA head of commodities research
Why It Matters
As of August, U.S. is now the world’s largest oil producer. Falling prices may weigh heavily on an industry that now represents a larger share of the U.S. economy.
While lower oil prices boost consumers, ultimately energy producers will be forced to cut back, laying off workers which may send prices ultimately spiking higher.
Organization of Petroleum Exporting Countries (OPEC) meets Dec. 6th. Its de facto leader Saudi Arabia is arguing for a cut in supplies to prevent a glut. But first, strategists will watch Friday’s G20 meeting, including the Saudis, Russia, & U.S., for hints on what’s next.
- Crude Oil Slides Below $50 for First Time in Over a Year:
- Oil prices shift higher on dollar weakness, but 10th weekly rise in crudeA stockpiles limits gains:
- Oil price slump won’t hurt most Gulf states – but they’re far from out of the woods:
- Goldman Sachs contradicts Trump: $50 oil is bad for the US, commodity chief warns:
- Oil prices edge lower ahead of G20, OPEC meetings:
- Risks rising that oil prices will cause next recession:
- The United States is now the largest global crude oil producer:
by Jenna Lee,