Oil Warning: Crash May Be Much Worse Than You ThinkUntil recently, confidence in a strong recovery for oil prices—and oil companies—had been pretty high, wrote analysts including Martijn Rats and Haythem Rashed, in a report to investors yesterday. That confidence was based on four premises, they said, and only three have proven true.
4. Oil supply will drop: Uh-oh In theory: With strong demand for oil and less money for drilling and exploration, the global oil glut should diminish. Let the recovery commence.
In practice: The opposite has happened. While U.S. production has leveled off since June, OPEC has taken up the role of market spoiler.
OPEC Production Surges in 2015
For now, Morgan Stanley is sticking with its original thesis that prices will improve, largely because OPEC doesn't have much more spare capacity to fill and because oil stocks have already been hammered.
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But another possibility is that the supply of new oil coming from outside the U.S. may continue to increase as sanctions against Iran dissolve and if the situation in Libya improves, the Morgan Stanley analysts said. U.S. production could also rise again. A recovery is less certain than it once was, and the slump could last for three years or more—"far worse than in 1986."
"In that case," they wrote, "there would be little in analysable history that could be a guide" for what's to come.
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http://finance.yahoo.com/news/oil-warning-...-100012809.html even with the world oil price goes lower, the retail fuel price in Malaysia would still maintain or go a bit higher because weaker MYR
Jul 20 2015, 06:02 PM
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