The price of oil finally has been recovering from below $30 in January 2016 to close to $50 in July 2016. Many factors have helped the oil price recovery, but mainly the increase in the world demand and the decline in production. The USA production, mainly from shale oil, has declined by close to 700,000 b/d since at the current oil price shale oil is still considered economically not attractive. Further, the interruption in production due to the forest fires in Alberta, and in Nigeria due to the local conflicts have helped balancing the world supply and demand. Although several indicators suggest that the oil price will likely to continue its recovery, most of the oil companies are very cautious to increase activities, as there is still a major concern about the oil price stability. It is remain to be seen how the oil companies will set their budget for 2017, as numerous projects have been canceled during the past 2 years. There are very few companies in Alberta that actually increased the budget already for 2016 including White Cap Resources, which is really the exception to most of the other oil companies. The future of the oil price still uncertain and there is a wide range of predictions from as high as $60 by the end of the near to $40. There is definitely a major challenge facing the oil industry on how to set the level of activities for 2017. But the main thinking is to start to cautiously increase the level activities to avoid potential decline in the oil price…

2017-02-01T20:04:15+00:00 July 7th, 2016|

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