Outlook For Oil Prices In 2016 According To LSU’s Center For Energy Studies
When you're filling up your car with gasoline you really appreciate the low oil prices. When you or someone you know is out of a job or working reduced hours then you don't like low oil prices at all. The ups and downs of the energy industry are nothing new. Here in Louisiana we've come to expect them. Much like hurricanes all you can do is prepare for them. The question on a lot of people's minds as we begin a new year is how long are we going to have to hold our breath waiting for a rebound of some kind?
David Dismukes is Executive Director at LSU's Center for Energy Studies. He says the reason for the low prices of oil is quite simple. It's supply and demand. Right now the supply of oil exceeds the demand for oil. He also doesn't see that situation changing anytime soon.
There is nothing out there from an economic perspective to suggest that we're going to get some big surge in economic activity, not only in the United State but more importantly globally, that's going to create that rebound in 2016.
If you're not connected to the oil industry you might not have a really good grasp as to just how far the prices have fallen. Slightly over a year ago in 2014, the price of oil on the New York Mercantile was about $100 a barrel. In the last few weeks of 2015 the price for a barrel of oil was about $37. Some forecasters have even suggested that oil prices might get as low as $20 for a barrel. Dismukes isn't quite sold on that line of thinking.
I think the opportunities for the downside are somewhat limited and I think the market is at least resilient enough to pop back up into the upper 30s and 40s and to sustain that for a while.
I know that across the entire energy spectrum right now people are trying to keep as many employees as they can because it's so expensive to train these employees and they're very skilled at the tasks that they do.
When you think of the volatility of the oil market and how it's influenced by world politics, weather, and other incidents that are beyond our ability to predict that's probably a good strategy. The prevailing thought for many in the industry is this, oil prices will eventually rebound but barring some major event it is unlikely there will be a significant rebound in 2016.