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Citigroup Energy Futures analyst Tim Evans on the factors impacting oil prices and the potential impact on investors.
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All right no way to get a clear fix on a price of oil looked like we might get a price footing at the end of last -- -- but.
What happened today again it was down so what is really driving the price of oil one.
We asked Tim Evans -- Citigroup energy futures analyst.
And Tim I know you've been living and breathing this for quite some time but lately what is it you see that gives you the answer.
Well.
There's not necessarily as you suggest that there's not necessarily a very clear answer at the moment we've got some upward price pressure.
The quantitative easing is as support for war investor appetite for risk.
Bought.
You.
-- enough supply in the market for the fourth quarter if the North Sea comes back on line is expected.
You could run a surplus of about 650000.
Barrels a day.
Doesn't -- say what's happening to the price -- well that that.
Neither mideast violence which usually spikes oil -- the Fed easing in tremendous -- much reason that we thought they were gonna do.
Is more important to demand -- world demand is slowing down at the world economic growth is slowing down.
That trumps everything -- that brings down -- price of right right basic lead the the underlying demand growth that we're seeing.
From last year on ended this year in projected forward in the next year is about one per cent year on year.
Now that still positive but it's below the long term trend growth of more like one point 7%.
Globally.
So in this soft growth environment.
Supply is -- more easily able to keep up.
Well -- I mean the fundamentals would would speak volumes about the fact that oil should be lower so my question to you is.
What's the next stop eighty dollars a barrel -- a hundred dollars a -- Well.
It might be eighty dollars a barrel.
For the US west Texas intermediate price how about ninety a hundred dollars for the Brent price at the same time.
Ahead trading a 109 -- change today.
By the way we have a lot more -- -- coming on line as a result of North Sea the North Sea operations have been kind of put on hold for a while where they did maintenance severe and it's now they're they're being released so we're gonna see a lot more supply coming on line from the north say yes yes so was total long OPEC production.
Should be about 700000.
Barrels a day higher in the fourth quarter.
Then it is in -- third quarter.
Well this is all about people watching and saying what should I do and what should I add or take away from my portfolio to make me money for my retirement my pension my 401K.
They're the big integrated oils ExxonMobil Chevron there -- the drillers -- the oil services companies like that.
That the Schlumberger is up -- I -- right what do you think is at a beneficiary of the current atmosphere.
Well.
I'm more of and will price.
Expert than I am an equity.
Of course but yeah still that's so -- pursue.
The logic of whether it's.
The refiners that may do well or whether it be the well I think it -- you know I think it -- price levels certainly every producer on the planet should be making money.
At these kind of price levels and with a significant.
Profit march and so I don't think that there's a lot of risk that -- -- going to see.
Upstream will producers.
Posting a loss any time soon so that takes some of the some of the fear factor out of things is for it has you know whether he wanted to -- events that -- money one of the most exciting things happening with oil right now is the discovery of shale well when the ability to use the fracking process to bring our -- which could create energy independence for the united stands absolutely it is a very exciting prospect unfortunately.
That's the price comes down -- People are less into it because did the incentives are not -- so it doesn't and as well surely an -- for what might the lower prices.
Sort of -- -- -- the discovery that's true -- we've seen a little bit of slowdown.
In terms of the number of drilling rigs at work in the US in these will fields.
Little bit less enthusiasm.
Out there but the growth rates or still very aggressive and -- -- lower overall US will production.
Is is running six to 700000.
Barrels today higher than a year ago.
We cannot let you go without looking -- are bought gasoline went out while below three dollars and again we understand that this per gallon is is that the wholesale price not what you folks are are paying out their -- But at what point do we really started seeing it come down -- as meaningfully as we've seen crude oil prices come down.
Well we can't a setback in that regard in the -- hurricane Isaak shot.
A few of our refineries in Louisiana.
And so.
That resulted in some draw down in inventories.
US gasoline inventories overall were currently at the lowest since October of 2008.
All of -- now that tightness from from 2008 was also related to hurricanes.
So we're were.
In a similar situation it'll take it some time to get those in -- -- I'm glad to hear that Shell Oil was still that discovery is gonna continue going on behalf of the South Dakota has what -- 3% unemployment rating for nothing right Tim -- good to see thank you very much appreciate it we've got some breaking news.
