US $40 Oil per barrel and the Alberta Oilsands
US $40 Oil price per barrel – what does this mean for Alberta Oilsands
When US $40 oil price per barrel hits the world economy it means that there are more uncertain times to come for the Alberta Oilsands. A gauge for the strength of the US economy, the $40 per barrel price of oil in the US is signalling to the world that we are still in the midst of uncertainty. The January price per barrel of oil was in the mid $30 US and our current level is only slightly better. To the Alberta Oilsands that is still not a strong enough signal for players to make bold investments in new projects. I think what the big players are looking for is a stable US oil price at $50 per barrel or perhaps $60 per barrel. Not $40 per barrel of oil because at this price all projects related to the Alberta Oilsands is just marginally profitable. With an overhanging financial crisis, marginal projects are better put off than to be started. The direction of the market will tell Alberta Oilsands companies what they should do.
US Recession and Alberta Oilsands
The price of $40 US oil per barrel has been watched closely along with the US stock markets. The ups and downs of the Dow Jones Industrial Average has been a common pastime with viewers around the world. Especially with the slide of the DJIA mirroring the slide in the $40 US oil price per barrel and the fortunes of the Alberta oilsands. What is happening in the US with the continuous layoffs in the thousands from company’s such as Lowe’s, Home Depot, Walmart, and J.C. Penney just to name a few of the bell weather companies. The price of oil in the US has fallen to record lows and the price of the stock market is also at record lows. Is there a link between the price of oil and the US stock market? Will the US Recession lead to a slowdown in the production in the Alberta Oilsands as well. While the questions remain unanswered, the big players are on a wait-and-see approach to investing in the Alberta Oilsands. We will wait and see what happens before we take a bigger position in our Alberta Oilsands investments.
OPEC supply and Alberta Oilsands
OPEC or the consortium of Middle Eastern oil companies which stands for Oil and Petroleum Exporting Countries has long been the major player in deciding oil prices. A signal from OPEC regarding their supply usually signals to the world the direction of what oil prices should go. However recently OPEC has cut supply signalling the oil price per barrel to rise but the price has not done so. This cut is confirmed by the Energy Information Agency which reported a drop in inventories of US Crude. What can Alberta Oilsands companies do when even OPEC has no power to control the price of oil. Alberta Oilsands is the second largest supply of oil after Saudi Arabia, a member of OPEC, and has the worlds largest proven reserves even greater than the middle east. However Alberta Oilsands reserves are only proven if the price of oil remains above US $40 per barrel as this is the lower limit of the cost it would require to convert the oilsands to viable oil production. OPEC’s cut in supply should affect world oil prices in a more direct manner but in today’s uncertain economic environment, consumer confidence is a bigger key in unravelling the price of oil.