The price of oil is currently being forced down. Saudi Arabia is producing more oil and creating a glut that is damaging to the US Oil Industry. This is not something new.
Let’s look at some facts:
- The break-even cost to produce oil in the US is currently $36.20 per barrel.*
- Oil is at $30.28, an 11-year low (below break-even point for many countries)*
- 250,000 oil jobs lost as of November 2015, with even more layoffs continuing*
- With only 516 oil rigs currently in operation, oil rig count is down -63.7%*
- US oil production is expected to decline in 2016*
As shown, the damage is quite extensive. This adds up to an inability to maintain the high production level the US is accustomed to. With the inevitable drop in US production, it translates into a decrease in supply.
What about the ‘demand side’ of the equation? Is the demand for oil going away? The answer is an absolute and resounding NO. Since 2012, the US alone has added over 30 million new cars to our roadways. This is an average of 7.6 million per year; as compared to the estimated new cars worldwide for 2015 which was 72.5 million.* The answer becomes quite obvious.
We have oil supply suddenly decreasing, but demand continuing to increase. When this happens, oil prices go up.
Going back to the ‘supply side’ of the equation, Saudi Arabia is currently borrowing money to keep their economy going while their budget deficit is expected to hit 20% GDP in 2015*. How long can they continue to keep the price of oil low through overproduction? The answer is obvious. The price of oil may very well skyrocket when they slow production causing a further decrease in supply.
Saudi Arabia cannot afford to continue to drown the world with oil and will eventually cut production.
Call now to find out how you can jump on this incredible investment opportunity. Do not wait until it is too late!
Gray von Adelung
Registered Principal
*November 24, 2015 US Cost to Produce Oil by Paul Ausick
*Baker Hughes Rig Count Jan 2016
*Oil Price, Oil jobs lost November 23,2015
*Market Watch, Oil falls Jan 7, 2016
*Statistics Portal, US and International Car Sales
*Bloomberg, 50 oil puts Saudis Budget deficit Beyond Sept. 16, 2015
*CNN Money-OPEC Leader Saudi Arabia is having to borrow money August 6, 2015