1. While
focused
on
lower
prices
today
and
shu4ng
down
projects.
Can
lead
to
poten9ally
supply
shor:alls
and
upward
price
shocks
in
the
future.
This
could
be
even
more
harmful
for
the
global
economy
in
the
future.
Oil
price
vola9lity
has
been
the
name
of
the
game
since
oil
prices
have
been
made
public
trading
figures.
Vola9lity
has
been
driven
by
consump9on,
produc9on,
geopoli9cal
and
psychological
reasons,
one
or
more
combined
together.
Today
we
see
over
produc9on
combined
with
geopoli9cal
reasons
enforcing
the
oil
price
to
take
a
dive
in
2015.
In
addi9on
there
is
a
psychological
factor
milled
into
this
price
war
going
on
at
the
moment.
Oil
price
vola,lity
and
reasons
for
it
Oil
price
development
–
price
development
plausibility

2. Oil
Price
sta9s9cs
2009-­‐15
Oil
prices
have
been
above
125
USD/bbl
within
the
last
5
years,
and
been
below
40
USD/
bbl
in
the
same
period.
Do
these
numbers
represent
ceiling
and
floor
for
oil
prices
or
could
we
see
oil
prices
challenging
both
top
and
boRom
levels
seen
the
last
5
years?
Break-­‐even
Oil
Prices
For
Oil
Project
around
the
World
Oil
price
development
–
price
development
plausibility

3. Average
oil
price
had
a
peak
in
period
2011
–
2014.
Last
peak
was
in
period
1979
to
1985.
Lowest
average
oil
price
levels
were
in
1986
and
1998,
Peaks
are
periodically
of
longer
wavelength
than
the
lows.
Therefore
there
is
a
larger
probability
the
present
low
values
will
not
be
long
las9ng,
but
prices
will
increase
within
a
short
9meframe.
Issues
determining
this
are;
• Consump9on
requirement
as
a
func9on
of
global
economy
improvement,
mainly
in
US
and
China.
• Produc9on
levels
will
be
kept
at
rela9vely
high
levels
as
Saudi
Arabia
will
not
pursue
lower
produc9on
volumes
and
be
leader
in
price
manipula9on,
but
will
ask
other
countries
if
possible
to
ini9ate
produc9on
cuts,
which
are
less
likely.
• Geopoli9cal
effects,
driven
partly
by
resource,
but
also
currency
wars
and
instabili9es
around
various
regions
in
the
world.
Oil
price
decrease
follow
same
paRern
as
seen
in
2008
crash,
with
approximately
same
rela9ve
decrease
in
values.
Average
Oil
Prices
during
the
period
1978
-­‐
2015
Oil
price
development
–
price
development
plausibility

4. Average
Global
Oil
produc,on
Oil
price
development
–
price
development
plausibility
Lowest
rela9ve
produc9on
levels
were
in
1983,
but
oil
prices
were
s9ll
part
of
the
taper
of
a
smaller
oil
price
high
in
the
same
period.
Since
then
we
have
had
a
steady
increase
in
produc9on
volumes,
but
not
drama9c.
So
this
alone
can
not
explain
the
decrease
in
oil
price
we
observe
today.
There
must
be
other
reasons
making
up
the
main
controlling
factor
for
the
oil
price
development
in
2015.

5. The
oil
price
crash
of
2014
/
15
is
following
the
same
pace
of
the
2008
crash.
The
2008
crash
was
mainly
demand
driven
and
began
2
months
ahead
of
the
broader
market
crash.
Demand
shi`
was
caused
by
economic
havoc
due
to
housing
market
crash
in
US
spilling
over
to
deriva9ve
markets
etc.
The
2015
price
crash
is
mainly
controlled
by
weak
demand
factors
at
play,
causing
an
over
supply
in
today’s
market.
The
demand
shi`
is
mostly
geopoli9cally
driven
in
2015
and
has
spilled
over
into
the
financial
market
causing
specific
financial
markets
to
crash,
such
as
in
China.
Produc9on
in
OPEC,
Russia
and
FSU,
China
and
SE
Asia
and
in
the
North
Sea
are
all
stable
to
falling
slowly.
Produc9on
levels
in
USA
has
risen
with
4
Mbpd
in
4
years
has
upset
the
global
supply
dynamic.
It
is
unreasonable
for
the
OECD
to
expect
Saudi
Arabia
to
cut
produc9on
of
cheap
oil
in
order
to
create
market
capacity
for
expensive
US
oil.
The
oil
price
stabilizer
will
mainly
be
a
geopoli9cal
solu9on,
which
could
call
for
a
longer
than
pervious
low
price
situa9on.
The
anomaly
confirming
the
rule?
Oil
price
development
–
price
development
plausibility