Could Oil Prices Drop Below $30?

The oil industry has been shaken to its core over the past few years, with oil prices plummeting by more than 70% since mid-2014. The dismal figures have left a trail of economic disaster in their wake, and industry experts are warning that the future is not looking bright. While per barrel prices recently jumped in the aftermath of a UAE production cut, analysts are maintaining that the chances of a long term rise remain dire.

Following the announcement from UAE oil and gas officials, both Brent and US West Texas Intermediate (WTI) crude gained up to six percent on their previous settlements. This saw Brent rise to $31.53 per barrel, and WTI increase by 4.5% to settle at $27.39. it is a positive figure, yet Reuters is maintaining that both are on track to experience respective weekly losses of more than 7% and 11%.

Long term trouble, despite short term respite

The UAE energy minister Suhail bin Mohammed al-Mazrouei has flirted with the idea of cutting output with other exporters, analysts remain cynical about the likelihood of a dramatic price increase.

Hans van Cleef, senior energy economist at ABN AMRO explains, "The comments by the UAE oil minister are pushing prices up… but we're still in a long-term downturn. That hasn't changed."

On the contrary, he interprets the recent price spike as proof that the oil and gas industry is currently experiencing a highly volatile period, as opposed to a one-way price movement.

Conflicting opinions

Of course, not everyone is as negative as van Cleef. Unsurprisingly, oil major BP predicts that the global glut of oil will be steadily minimised as demand increases, resulting in a $100 per barrel price spike over the next few years. The optimistic forecast was part of the company’s annual Energy Outlook report, where it maintained that fossil fuels would still account for 80% of the world's energy needs in 2035.

Its palatable that the oil and gas industry has some serious challenges to overcome over the next few years. As well as plummeting prices, the production process is also peppered with hurdles. ‘Use of Modern Process Gas Chromatographs in the Oil and Gas Industry Proven and widely used technology with numerous applications and new innovative approaches as well’ explores the tremendous value of process gas chromatography, and its role as an important tool for process analytics. Thanks to its high availability and extreme flexibility, it’s ideal for use in a variety of applications, despite the varying requirements of the market.

Image via Flickr Creative Commons. Photo credits: Adam Selwood