Chee Yew Cheang from Rigzone Staff concluded that low oil prices showed little signs of a turnaround. He shared views with some industry players at a recent Singapore forum (14th Annual Marine Money Singapore Ship Finance Forum) on how to operate in a $50 a barrel oil market.
Generally, the Forum discussions showed uncertainty about when global oil prices would recover.
Global oil prices have lost half of its value from a year ago due mainly to a supply glut, a situation developed by the decision of the Organization of Petroleum Exporting Countries (OPEC) in November 2014 not to reduce production so as to protect their market share. The prolonged supply glut pressed downward global oil prices towards $40/ barrel which is the lowest since March 2009.
Weak oil demand caused by low global economic growth and the surge in U.S. shale production of course caused the supply glut, but the industry downtrend developed mainly by OPEC adherence to defend the cartel’s oil production level.
This is a strategy to drive the price of oil down, to drive out the competitors that have more expensive recovery, like the Russians, North Sea and U.S. shale production “Kenny Rogers, head of Chemical Transport Logistics at Aurora Tankers/IMC Industrial Group” said.