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Can oil bottom as low as $15 per barrel?

voyager

Active Member
Apr 28, 2009
1,022
579
Amsterdam, Netherlands
Oil prices have already taken a dramatic fall that's saved consumers big time at the pump. Last week, crude tumbled below $42 a barrel, down from $100 last year. One big-name investor is predicting an even sharper drop. "There is no evidence whatsoever to suggest we have bottomed. You could have $15 or $20 oil -- easily", influential money manager David Kotok told CNNMoney. http://money.cnn.com/2015/08/18/inve...ices-15-kotok/ And how will this affect EV sales?
 

Robert.Boston

Model S VIN P01536
Moderator
Oct 7, 2011
7,844
42
Portland, Maine, USA
Oil prices have already taken a dramatic fall that's saved consumers big time at the pump. Last week, crude tumbled below $42 a barrel, down from $100 last year. One big-name investor is predicting an even sharper drop. "There is no evidence whatsoever to suggest we have bottomed. You could have $15 or $20 oil -- easily", influential money manager David Kotok told CNNMoney. http://money.cnn.com/2015/08/18/inve...ices-15-kotok/ And how will this affect EV sales?
CNN appears to have pulled this interview. It's available on Bloomberg.

Whatever Kotok might think, the market gives this thesis very little (not not zero) credence. Crude oil puts at $15/bbl have zero volume and a zero price (for Jan'16). I was surprised, though, that $20/bbl puts were up from $0.02 to $0.06 yesterday. I wonder if Kotok had bought some puts before his chat? Nice way to triple your bet....
 

voyager

Active Member
Apr 28, 2009
1,022
579
Amsterdam, Netherlands
CNN appears to have pulled this interview. It's available on Bloomberg.

Whatever Kotok might think, the market gives this thesis very little (not not zero) credence. Crude oil puts at $15/bbl have zero volume and a zero price (for Jan'16). I was surprised, though, that $20/bbl puts were up from $0.02 to $0.06 yesterday. I wonder if Kotok had bought some puts before his chat? Nice way to triple your bet....

Haven't thought of that. A bit like Morgan Stanley saying that Tesla stock might double?
 

FlasherZ

Sig Model S + Sig Model X + Model 3 Resv
Jun 21, 2012
7,028
1,025
Yes we could have $15 for oil also according to me. IMO Countries all over the world should put taxes on oil preventing oil ti become convenient to buy. This is not against the market but to prevent further damages to the Earth.

Won't happen. Oil is at the center of many economic engines (not just oil as a product, but rather the use of oil in plastics, transportation, etc.) and crushing taxation would only slow growth more.
 
Oil prices have already taken a dramatic fall that's saved consumers big time at the pump. Last week, crude tumbled below $42 a barrel, down from $100 last year. One big-name investor is predicting an even sharper drop. "There is no evidence whatsoever to suggest we have bottomed. You could have $15 or $20 oil -- easily", influential money manager David Kotok told CNNMoney. http://money.cnn.com/2015/08/18/inve...ices-15-kotok/ And how will this affect EV sales?

It's possible but probably unlikely. At today's prices most new projects are already uneconomic. Oil companies are already cutting back on projects and reducing staff. The lower the price goes the faster this will occur. Eventually the production will fall off until there is less supply than needed. Remember most oil fields have natural decline of about 8% per year if nothing is done to prevent it. Once supply dries up the prices will go back up. It then takes time to ramp back up because the companies need to rehire employees and restart projects. Many smaller companies will probably go out of business. The oil industry has always been dictated by booms and busts.
 

neroden

Model S Owner and Frustrated Tesla Fan
Apr 25, 2011
14,676
63,885
Ithaca, NY, USA
$15 is pretty unlikely. Below $30, a lot of sources of production shut down. I think even the variable costs of tar sands aren't covered.

- - - Updated - - -

Remember most oil fields have natural decline of about 8% per year if nothing is done to prevent it
And fracked fields have decline rates of 20% - 50% per year without new drilling. So that causes a very fast dropoff when drilling stalls.

Now, the oil market does have massive speculative swings to it, so it might swing down to $20 for a short period before it starts going back up. $15 seems really really unlikely though.
 

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