Quote:
Originally Posted by spirt4u
The way things are looking. I feel oil will see $20 something. The Cnd. dollar may touch the 60s. Opec is standing firm. Iran will come on stream in the new year. Canada will feel the brunt of this with its expensive extraction of oil. Nothing will turn around quickly. I'm not trying to be negative, it's just my observation.
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I think it will go as low as 18-19 a barrel.
Cdn dollar will be around 50 cents
By then 81 will look like the good old days for those that remember it. Those with mortgages will be crying, those without will be thankful.
Cost of food will go through the room.
http://calgaryherald.com/business/en...-22-per-barrel
Some western Canadian oil selling for less than $22 per barrel
BLOOMBERG NEWS
More from Bloomberg News
Published on: December 14, 2015 | Last Updated: December 14, 2015 8:59
As oil crashes through $35 a barrel in New York, some producers are already living with the reality of much lower prices.
A mix of Mexican crudes is already valued at less than $28, an 11-year low, according to data compiled by Bloomberg. Iraq is offering its heaviest variety of oil to buyers in Asia for about $25. In Western Canada, some producers are selling for less than $22 a barrel.
“More than one-third of the global oil production is not economical at these prices,” Ehsan Ul-Haq, senior consultant at KBC Advanced Technologies Plc, said by email. “Canadian oil producers could have difficulty in covering their operational costs.”
Oil has slumped to levels last seen in the global financial crisis in 2009 amid a global supply glut. While the prices of benchmarks West Texas Intermediate and Brent hover in the $30s, they represent a category of crude — light and low in sulfur — that is more highly valued because it’s easier to refine. Some producers of thicker, blacker and more sulfurous varieties have suffered heavier losses and are already living in the $20s.
A blend of Mexican crude has plunged 73 per cent in 18 months to $27.74 on Dec. 11, its lowest level since 2004, according to data compiled by Bloomberg. Venezuela is experiencing similar lows. Western Canada Select, which is heavy and sulfurous, has slumped 75 per cent to $21.82, the least in seven years. Other varieties including Ecuador’s Oriente, Saudi Arabia’s Arab Heavy and Iraq’s Basrah Heavy were selling below $30, the data show.
Crudes of this type trade at a discount to lighter varieties because to process them “refiners have to invest in upgrading facilities such as coking plants, which are very expensive,” KBC’s Ul-Haq said.
“Most places in the world, a lot of the producers they don’t really get the Brent price, and they don’t get the WTI price,” Torbjoern Kjus, an analyst at DNB ASA in Oslo, said by phone. “It’s really a dramatic situation that really cannot continue for a very long time for many producers.”
Mexico’s government insulated itself from the oil slump after it managed to hedge 212 million barrels of planned exports for 2016, using options contracts to secure an average price of $49 a barrel. The nation’s 2015 oil hedge provided it with a bonus of $6.3 billion.
Not all oil producing nations are as well protected. OPEC member Venezuela’s national budget for next year assumes a price of $40 when its own crude is trading just above $30. The nation’s dollar reserves have fallen by 32 per cent this year to $14.6 billion
Ironically, those selling at the lowest prices have even more incentive to pump, potentially deepening the glut that’s weighing on prices.
“A lot of the producers might want to sell as much at current prices,” rather than a level that could be even lower in coming weeks, Abhishek Deshpande, an analyst at Natixis SA, said by email.
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