Why is $65/bbl the "Right Price" for WTI?

[dan_s]

Read: http://blog.gorozen.com/blog/update-on- ... -u-s-shale

During 2018 I repeated numerous times that I believe $65/bbl is the "Right Price" for WTI oil. The article above highlights why I think this.
> If WTI stays under $50/bbl much longer, Non-OPEC production growth will slow rapidly.
> The article lists several major Non-OPEC / Non-U.S. oil development projects that have been disappointing
> There are very few oil development projects that are economic at sub-$50 oil.
> There is no way that U.S. production growth can continue at the rate it has over the last two years. Why?...because at some point you (a) run out of Tier One leasehold and (b) you can't drill enough new wells to make up for the decline of the old wells. The math just won't work.
> At $65/bbl the ROI's look much better and upstream companies will have the operating cash flows and access to capital markets that are necessary for them to develop the future supplies that this world will require.
> This world runs on oil and there is NOTHING that even comes close to the energy density of oil. 100 million barrels of oil based products are now consumed EACH DAY.

REMEMBER: One year from now IMO-2020 will take 1.5 to 2.0 million barrels PER DAY of oil supply off the market.

If you are not aware of what IMO-2020 is, send me an e-mail (dmsteffens@comcast.net) and I will send you a recent article that explains the impact of these new regulations on the global oil market.

PS: IMO $65/bbl is the "Right Price" for oil today. The price will need to go up year-after-year because the "easy stuff" is always harvested first. As the article points out, in several major U.S. shale plays most of the Tier One leasehold has already been drilled.