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History Is Repeating Itself In The Oil Market, Pro Explains

History Is Repeating Itself In The Oil Market, Pro Explains

History is repeating itself in the oil market — at least its short-term history.

Daniel Yergin, IHS Markit vice chairman, was a guest on CNBC's "Squawk Box" and offered two reasons to explain why oil prices are "back to the past." First, oil inventories are now 10 percent higher than it was in the past, and second, the "remarkable" rebound in U.S. shale — or "shale 2.0" remains underway.

The falling oil prices is prompting OPEC members to "take a deep breath" and hope that oil inventories move lower, Yergin continued. The problem for OPEC members is that the growth in U.S. production is already set for 2017 so the possibility of any relief would be difficult this year.

History Repeats Itself

Years ago, many analysts and experts believed U.S. shale companies needed oil to trade at $70 per barrel to survive. While there were some struggles, the industry as a whole managed to survive at lower prices.

Today, the figure of $40 to $45 per oil is thrown around to be the minimum cost for American companies to survive. But, as has been the case in the past, American ingenuity and technological advances implies companies can do an "awful lot" at current prices.

Nevertheless, the pressure to some companies will be large as oil drifts closer to the $40 mark, but some companies will perform just fine, Yergin added.

Related Link:

Non-OPEC Countries Alone Can More Than Account For The Jump In Demand

Here's Why Oil Could Drift To $30 Again


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Posted-In: CNBC Daniel Yergin IHS MarkitCommodities Top Stories Markets Media Trading Ideas Best of Benzinga

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