Ten years minima

Observing the graph shows we can see that prices were not below 30 $ since credit crisis of United States of 2008 where international situation was very different from the current one. Since then the recovery of prices was progressive until reaching the environment of 100 $ where demand and supply remained stable. From then on nothing remarkable happened until the beginning of 2015. Since then demand has been declining and supply far from reduced to increased by 10% throughout 2015. Coming to crisis early in the year.

At the beginning of 2016, we stunned the unstoppable decline in oil prices. It reached minimums in a decade already forgotten, very close to the cost of production. This oversupply was facilitated by Saudi Arabia, first country that produces crude, and Russia that did not stop pumping oil. While in the case of Russia it responds to the economic needs of the country that bases a large part of its GDP on the gas and oil industry. While Saudi Arabia was rather in response to its main enemy, Iran, which for the first time was to be exempt from trade embargoes by the United States and Europe and had already begun to open several oil wells for the purpose of export.

Also with response the opening of wells in the United States and in other places of the planet with the technique of "frakking". A technique in which oil is extracted to a great depth by establishing hydraulic methods that are expensive and dangerous. Recall that BP had an explosion two years ago in one of its oil companies that apart from costing human lives scattered millions of tons of crude oil across the Atlantic, polluting ecosystems and marine species. This technique comes out profitable starting at $ 50 per barrel. So most platforms were closed and 90% of prospecting to find reservations canceled.

Thus the Saudis would soon enter reason and cut production to reach better prices assuring that the United States would not open new wells and they would not suffer losses. This happens when the average price of the barrel stabilized at 45$. Even so, it was not enough for them and for other crisis-hit countries outside OPEC such as Venezuela, Nigeria, Brazil or Iraq. Countries with tremendous political and economic difficulties.

Irreconcilable quarrels on the part of Iran and Saudi Arabia made the first crude oil cut deal fail in the summer and was left for a future occasion. However prices would not fall back by more than 40 $ by the production freeze .

Starting in September a new attempt was made to slow production as a result of the Vienna summit that occurred in December where OPEC members agreed to close Of 1.2 million barrels per day . Outside of OPEC production was cut, with Russia being the main manager of these meetings. These cuts will begin in January next year although the changes have already been made oil has being appreciated by about 25%. Turning now to be in a fork between 50$ and 57$.

Due to the rise in the dollar price oscillation in the last month has been abrupt but in the coming months the price will be somewhat more stable. From my point of view this should result in a price of about 60-65 $ .

Even with these changes, the situation is not at all flattering in the oil market as it has to deal with the following problems:

• China's lower demand is reducing production and more with antidumping measures by the EU and USA.
• Discovery of new deposits that in the next few years can be exploited as the last of Brazil that is estimated to be the largest to date making it the first country with greater capacity.
• Kazahagan restart his petrol extraction than could achieve 1.6 millions barrels daily in 2018.
• The growth of production in the Nordic countries and Canada, which are pulling their reserves since they correctly assume the decline and that it is better to sell at these prices not to sell them in the future.
• And most important, the implementation of electric cars throughout Europe and China in particular that can account for 25% of the total car park in 2020 and could end with combustion engines probably by 2030. Apart from the increase in pollution in the large European cities which have already brought with them measures by municipalities to limit the use of the car and encourage a more responsible use of public transport.

After this my estimates for 2017 can be seen in the following chart:


For this reason, any investment related to oil for this year will be a good option since there is still a lot of margin to recover in all the securities like petroleum and refining companies . Instead, this price hike may be negative for airlines and transportation companies as they increase their spending.

Thus, with these variables, I believe that the rise in oil can have the days counted and not more than two years, so the oil sector can be a good investment over the next two years, Although there will be an incredible reduction in demand will always be needed for other industrial purposes, but the fall you suffer with the electric car will be brutal.