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I hate to ruin your day,
but oil prices are about to drop to $30

James Brooks, RBAC Inc., June 15, 2015

Despite all indicators of oil prices making a recovery albeit slow, they are actually going to drop down into the $30 range. Am I crazy? If I were to have told you last July that oil prices were going to hit $50 by January, would you have considered me crazy then?

The truth is that I have no idea if the price of oil is going to drop to $30 or if it will recover in 6 months or even 24 months. Despite all our best efforts, the industry can be unpredictable at times and really turn itself on its head.

So, what does good fortune in an unpredictable market depend on? Luck?

In George S. Clason’s book, “The Richest Man in Babylon”. The story centered on a man named Arkad and how he had become the richest man in Babylon. Arkad frequently shared his knowledge with his fellow citizens through stories and discussions he held. In one of those discussions a man suggested the topic of luck.

Arkad suggested, “to some men, good luck bespeaks but a chance happening that, like an accident, may befall one without purpose or reason.” Upon further discussion and the tales of men who sought good luck, the truth about luck was revealed. He explained, “Good luck, we do find, often follows opportunity but seldom comes otherwise… Action will lead thee forward to the successes thou dost desire.”

What we can take from that is any possible opportunity requires action, but how do you know what action to take when the future is unpredictable?

The only way to know what action to take is to understand how to identify opportunities in the first place. To successfully identify the opportunities in the natural gas industry, one must have much greater detailed information in a market forecast. Between new infrastructure projects, pipeline reversals and repurposing, and shifting global demand, there has never been a greater need for transparency and detailed analysis. Being prepared for any outcome gives one the best chance to identify and capture the opportunities presented to them. Using fundamentals modeling tools, one can design scenarios to study all of the risks and opportunities surrounding any project.

Action leads to success. Are you prepared if oil prices drop to $30?

RBAC has been the leader in building the fundamental analysis tools used by the energy industry and related government agencies for nearly two decades. The GPCM® Natural Gas Market Forecasting System™ is the most widely used tool of its kind in its markets.  RBAC other products include the GPCM Daily™ Gas Model, GPCM Viewpoints®, NGL-NA™ Model, Global Gas Market Model (G2M2™) and a power model interface (GPCM-PMI™) for power demand modeling that integrates with Natural Gas and other fuels.

© 2016 RBAC, Inc. All rights reserved.  GPCM, GPCM Natural Gas Market Forecasting System, GPCM Daily, GPCM Viewpoints, GPCM-PMI, G2M2 and NGL-NA are trademarks of RT7K, LLC and are used with its permission.