I have no clue where oil prices are headed. Like everyone else, I have been confounded by recent developments.
Leading up to the November 27 OPEC meeting, I expected that OPEC would not cut its production to support higher prices. I got that part correct. I thought, however, with the recent drop or fall in oil prices that most of the damage had already occurred. I did not anticipate a precipitous further drop in price following the OPEC meeting on Thursday and Friday.
I have been reading everything I can in an attempt to anticipate future developments. After all my reading, I have come to believe that the near future is highly uncertain. Some forecasters seem to suggest that we have likely already overreacted. While others, including Murray Edwards of Canadian Natural Resources who stated in a Financial Post article Canadian Natural Resources Chairman sees oil touching US$30 a barrel believe that oil prices might fall as low as US$30 per barrel.
My only expectation is that the next few months will be unsettling times for the oil industry. Eventually, oil prices will find a new normal and the industry will adapt. I further expect that there will be changes in Alberta and in Calgary, more specifically, with decreased oil revenues in the short term. Looking further afield, watch Venezuela. It was encountering severe stresses prior to the collapse in oil prices. Unfortunately, this recent change might hasten further adverse changes.
The year 2015 promises to be one of change for the oil industry.