With prices at a 11-year low common wisdom suggests a rebound is imminent, but look closer and more expensive oil still seems some way off
The price of a barrel of Brent crude fell below $35 on Wednesday for the first time since 2004, a remarkable event given that the global economy, while plainly not red hot, is several degrees above lukewarm. Even after the banking crash of 2008, and the global recession that followed, oil only briefly traded below $40 a barrel. So, you would assume, a rebound in prices must lie around the next corner, just as the Opec cartel and oil company chiefs keep telling us.
One of these days – or months, or years – those predictions of more expensive oil will be proved correct. Today’s glut of supplies always becomes tomorrow’s shortage as exploration and production budgets are slashed and low prices stimulate demand. The question, however, is when that day arrives. The guess here is that it’s still some way off. In the short-term, sub-$30 oil seems a real possibility.