Economy
Related: About this forumOil's Nightmare Scenario Dominates Davos
The first mantra of the oil crisis was lower for longer. Then lower for even longer. Now in Davos, oil executives are starting to talk -- or rather, whisper -- about a new nightmare scenario: A lot lower for a lot longer.
Oil executives, policy makers and banks said in the first days of the World Economic Forum that a recovery will remain elusive in 2016 as major producers keep pumping and Chinas fuel appetite slackens. And they fret that prices could take another hit as Iranian crude freed from sanctions flows back on to world markets.
It is the third year in a row we have more supply than demand, Fatih Birol, executive director of the International Energy Agency, told Francine Lacqua in a Bloomberg Television interview. Prices will be still under pressure. I dont see any reason why we have a surprise increase in the price in 2016.
Things wont get better until energy markets have weathered the supply shock, said Tony Hayward, chairman of Glencore Plc, one of the worlds largest trading houses. Quite simply, theres too much oil, he said.
The end of nuclear-related sanctions on Iran on Jan. 16 has freed the OPEC member -- once the groups second-biggest producer -- to revive crude exports slashed in half by almost four years of restrictions. Impatient to claw back lost revenue, the Persian Gulf nation issued a directive to restore daily output by 500,000 barrels as soon as possible.
The lifting of Iran sanctions will in my view continue to add supply, so I dont see a bottoming-out of oil prices and a re-spiking any time soon, said UBS Group AG Chairman Axel Weber. Depressed prices give Irans rivals, such as OPEC leader Saudi Arabia, all the more incentive to keep pumping, he said.
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http://www.bloomberg.com/news/articles/2016-01-20/davos-view-on-oil-lower-for-longer-turning-into-something-worse
EdwardBernays
(3,343 posts)driven by fear and paranoia.
Oil prices are so detached from supply and demand as to be completely unrelated.