See link below, historical graph for WTI, one of the foremost...

First 9 Last

Share
Profile

Follow
CbrMaroon

5,191 Posts.

572

29/12/23

14:48

Post #: 71658648
Share

Originally posted by tessathedog: ↑

I’m afraid I missed the “collapse”. I have noticed a “decline” in the oil price from a very high level to a high level…I take it this is the “collapse” you are referring to?

In answer to your question about the “break even” oil price, I think it’s about $30 per barrel.

As we all know (and accept) the oil price is highly cyclical. Sometimes it’s over $100, at another times it’s below the break even price. The company hedges to smooth that ride out to some extent.

We shouldn’t fear oil price declines too much. As the old saying goes “the best cure for a low oil price is a low oil price”. Demand tends to increase in response to the cheaper price.

My own view is that the dearth of new projects globally in recent years is going to result in generally higher oil prices. There will still be significant peaks and troughs, but the coming supply and demand imbalance (highlighted in the company’s recent investor day presentation) suggests the price of oil will (overall) tend towards strength for another couple of decades.

That’s how I see it. I accept that I could be wrong. I have noticed you see it differently. That’s fine. One of us will be proved right, but not for a long time. If we see $150 oil next year, it doesn’t mean I’ve been proved right. And if we see it fall below break even, it doesn’t mean you’ve been proved right either. What matters is the long term trend in the oil price, having little regard to extreme peaks and troughs. I’m betting it will be favourable.

Expand

See link below, historical graph for WTI, one of the foremost global oil benchmarks, on a 12-month view for the period to Jan 2024.

The bbl price of about USD$97 peaked in October 2023, overnight a further 3% decline to current at or about USD$71.80, and in your words a "decline", of about 25% in about 2 months only. A skillful nuance on your part.

There are a plethora of factors impacting on the global oil price, notably you chosen to exclude some eg geopolitical, a USA Presidental election in November 2024, and a possible global recession in the middle to latter part of 2024, as forecast by some economists.

However, if your forecast of USD$150 bbl in 2024 is achieved, would be happy to acknowledge your preeminent forecasting prowess. However, for us WDS holders, the really key question is the consequences for WDS performance and its rapid retreating sp of late.

WDS Price at posting: $31.11 Sentiment: None Disclosure: Held
1 Upvote

0 Great analysis

Reply

Top Stories

TM1

Shares up 196% on Terra's news of major reef discovery at Dante

BRX

Belararox delineates another porphyry in Argentina at Tambo South

ASX Market Update: Shares fall flat as GYG soars on debut | 20 June, 2024

GYG

Guzman Y Gomez shot up nearly 40% in first hour of trades. Can it last?

Your questions From the Floor: Investment experts respond...