When I woke up this morning, I checked to see how WTI is doing. I found out that it has dipped below $60/barrel. This is disturbing for several reasons.
WTI Prices, YTD (source: http://www.macrotrends.net)
Firstly, I have had many discussions with fellow engineers in the Houston area. The consensus is that for the economy in Houston to really get going again, the oil industry needs an oil price of $70. I believe that the oil community desires this; although, experts at CERAWeek have stated that a big chunk of that inflated price goes into waste and inefficiency in the energy industry. Some say that oil could be profitable at $40.
Secondly, I wonder were is all this oil supply coming from such that the price of oil continues to drop? What I mean is that some major players have been knocked out of the game: Venezuela is in chaos, Qatar dropped out of OPEC, and Iran is getting squeezed by US sanctions; and yet, US petroleum stocks keep going up (for petroleum stocks, see my recent article).
What really worries me is the constant uptick in petroleum inventories combined with increased methane flaring. Anyone with insight is welcome to comment.