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Valero Energy Corporation Message Board

  • bluecheese4u bluecheese4u Jun 25, 2013 1:40 PM Flag

    Oil prices to fall as much as 30%, forecaster says

    Oil prices to fall as much as 30%, forecaster says

    Posted on June 25, 2013 at 11:41 am by Zain Shauk

    Oil prices will fall as much as 30 percent by 2016 because of rising production and fuel efficient vehicles, according to a prediction from forecasting group Kiplinger.

    The group projected that oil prices would fall to between $65 and $75 per barrel by 2016.

    Other organizations, including investment banks and and research firms, also have forecast oil price declines, though other projections have been around $85 as a long-term price.

    Kiplinger said rising U.S. production, coupled with lower U.S. consumption of petroleum products would push prices down.

    “The U.S. is playing a major role in the shift,” Kiplinger said in its weekly letter published Friday. “Domestic oil use is down 11% from its peak in 2005, thanks to more gas-sipping cars and trucks. Meanwhile, output is up 30% since 2008, the legacy of tremendous gains in drilling technology that have revitalized the U.S. as a major producer. The net effect is huge, equal to the infusion of 4 million barrels of newfound oil supplies a day.”

    The change would come as businesses large and small are increasingly turning to natural gas, which is cheap in the United States as a substitute for petroleum products, Kiplinger said.

    Oil prices: Saudi Arabia remains key to oil prices, despite U.S. production surge

    “In the U.S. and China, truck fleets will use more liquefied natural gas…and less diesel,” according to a note from Kiplinger. “In the Middle East, new gas wells will feed power plants, freeing up more oil for export. And plastics makers will increasingly switch from oil to gas as a chemical feedstock.”

    Kiplinger predicted that natural gas prices would rise, because of increasing demand, from around $4 per million British thermal units today to between $5 and $6 in a few years.

    But other factors could play a role in keeping oil prices high.

    Members of the Oil Producing Exporting Countries have already begun

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