| Big Oil is too confident about crude prices. After a 40 percent rally from January’s six-year low, the momentum has been on the upside. But the current prices – $65 a barrel for Brent and $60 for WTI – look more like a ceiling than a floor. That is not what many insiders seem to think. Some oil service companies expect mid-$70s Brent by the end of this year.
Anglo-Dutch Shell assumed oil will rebound to $90 by 2018 in its $70 billion takeover of the UK’s BG Group. Some believe that the steep cut in capex costs will affect supply, including shale, and boost prices again. But such predictions may underestimate shale’s potential. Lower drilling and pumping costs, among other efficiencies, have pushed the breakeven cost of shale down to about $60, Goldman Sachs estimates. Lower oil prices have also helped cut costs, since shale drilling is energy-intensive......................................Full Article: Source
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