Oil prices steady following huge gains

USA crude futures slid 50 cents, or 1%, to $46.09. This trend is expected to continue next year without any revival of oil prices, which are stubbornly refusing to increase above $49 per barrel. Prices have decreased 13 per cent this year.

Powerful OPEC member Saudi Arabia is now focusing on the European market that has historically been Russia's primary market.

Iraq likewise produced 100,000 barrels per day less crude oil - Reuters cites weather-related delays to shipment from the country's southern export terminals as the reason for this reduction. Players who have higher breakeven costs will be the ones who will blink first and thereby reduce their production levels. Republication or redistribution of content provided by EconoTimes is expressly prohibited without the prior written consent of EconoTimes, except for personal and non-commercial use.

The next largest proved oil reserves are in Saudi Arabia with 266 billion barrels and Canada with 173 billion barrels. Venezuela's average oil price for 2014 was $88.42, down from 2013's $98.08, 2012's $103.42 and 2011's $101.06, but higher than 2010's $72.43, and much higher than 2009’s average price of $57.01.

Recalling that Iran's plan to increase oil production will be officially announced at the next meeting of OPEC, Zanganeh noted, "we will urge them to respect the daily production ceiling of 30 million barrels while Iran will not be waiting for any country to increase their production". The longer Congress keeps United States oil production hamstrung, the weaker individual companies become and the more desperate our working families become. By the end of 1985, oil and gas producers had already suffered from a steady decline in oil prices over the previous five years, shrinking equity valuations.

None of the experts, oil ministers expect a sharp oil price recovery or harsh "back to the good old" $100/barrel within the nearest future. It is an opportune time to buy such companies, break and reorganize them, and sell them later to those looking for small units and not the whole package. But with oil prices expected to remain lower for longer, selectivity and discipline will be critical to generating superior investment returns. Timing macro moves of this nature is always fraught with peril. When refineries begin buying more crude oil, less crude is left in stocks.

The global oil supply glut, which has more than halved oil prices since a peak in June past year, was underscored on Monday when Russia reported that its October oil production hit a post-Soviet record of 10.78 million barrels per day.

Bottom Line: When oil prices remain low but trade in a stable range, select energy stocks can deliver impressive total returns.

 

What drove the outperformance depicted in our graph? Production, on the other hand, held steady or even increased.