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Strategist Says That With Electric Vehicle Revolution, Oil Will Crash To $10 A Barrel


10/18/2017


Strategist Says That With Electric Vehicle Revolution, Oil Will Crash To $10 A Barrel
As alternative energy fuels continue to attract more and more investors and technologies for such energy develops and becomes cheaper, it is expected that oil prices will crash to just $10 per barrel over the next six to eight year, according to the belief of Chris Watling, the chief executive of Longview Economics.
 
Saudi Aramco's long planned initial public offering in the second half of next year is most likely to be one of the key catalyst for the oil market when looking ahead to 2018, Watling acknowledged. And he said: "well I think they need to get it away quick before oil goes to $10 (per barrel)", when he was asked about Saudi Arabia's state oil group being launched on the international stock market.
 
Watling argued that given that around 70 percent of oil is used for transportation, over the long term "what happens with electric vehicles is really, really important" even as he explained that he did not necessarily expect such an intense decline in oil prices over the coming weeks or months.
 
"We forget don't we? I mean 120 years ago the world didn't live on oil. Oil hasn't always driven the global economy… The point is alternative energy in some forms is gathering speed (and) things are changing," he added.
 
Over the next six to eight years, the price of oil would ultimately slump to $10 a barrel, forecast the Longview Economics CEO.
 
A dampener on hopes for higher prices could be put by the global outlook for oil markets in 2018, said the International Energy Agency (IEA) last week. oil price could be weighed down by static oil demand could weigh on the oil price, rising non-OPEC production and global stock builds, said the IEA in its closely-watched report.
 
Amid optimistic forecasts from the major oil producer group OPEC, the IEA's latest monthly report that was published has dampened that optimism somewhat. Following several years of low prices, there was evidence of the global oil market rebalancing, the oil producer cartel OPEC had argued.
 
Due to multiple factors that included weak demand, a strong dollar and booming U.S. shale production, there was a collapse in the price of oil which fell from almost $120 a barrel in June 2014 to well below $40 a barrel. Also seen as a key reason behind the fall was OPEC's reluctance to cut output. But in late 2016, along with other oil producing nations, the oil cartel soon moved to curb production.
 
While U.S. crude was around $51.50 a barrel, up 1.8 percent, Brent crude traded at around $57.39 a barrel in trading up 2 percent.
 
(Sourcec:www.cnbc.com)