Magazine article Business Credit

Expect Oil Prices to Stay Historically Low for Years

Magazine article Business Credit

Expect Oil Prices to Stay Historically Low for Years

Article excerpt

An April report from the Energy Information Administration (EIA) makes two major assertions: that global oil prices will remain well under $100 a barrel for many years--perhaps a decade or two--and that the United States will continue to be a major oil producer.

Both of these assertions contradict some of the more pessimistic assessments espoused by major oil companies and some of the top oil-producing countries that are major oil producers, neither of which want to see prices so much lower than the trends from last decade and early this one.

In the case of the EIA report, like many analysts, the key prediction is that the noted reduction in global demand for oil will prevail for some time. The reason for reduced demand is complex, but it is primarily related to the general economic slowdown globally as well as increasing efforts conserve and reduce oil usage. Notably, a hot global economic recovery is going to be elusive. As long as growth remains sluggish among the Europeans and the Chinese, at least relative to what it had been of late, oil demand will remain muted. …

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