YES, OIL PRICES ARE CYCLICAL
Amy Myers Jaffe
The New York Times , 18.6.2012
The latest round of briefing papers on oil published over the last week on Wall Street is a testament to how quickly things can change when it comes to oil prices. Less than a few months after Brent crude prices topped $125 a barrel, Wall Street is suddenly predicting a possible collapse in oil prices to $50 a barrel
The forecasts, which may or may not prove to be correct, reflect more than just a cloudy economic outlook for Europe. There appears to be a definitive shift brewing in long-range perceptions about future oil supplies.
With the shale oil boom promising over one million barrels a day of new oil production within a year in the United States, analysts are coming out of the woodwork to embrace falling oil prices. The new word on the street when it comes to oil is "sell."
Already, the long oil price, that is, futures prices going out past a year, has fallen to $85 a barrel, down from over $100 a barrel earlier this year.
Citigroup Global Markets took the lead last week with predictions of a cyclical shift that could cause prices to slide in the long term to as low as $50 a barrel.
In their latest publication, "Zeroing In On the Long-Term Oil Prices,"Citi analysts state: "Signs are abounding that the escalation in upstream capital spending is bearing fruit, with a surge in discoveries and reserve bookings that is already being converted into new production, particularly in North America.
