Noted industry analyst Philip Verleger, founder of PKVerleger LLC, predicts that oil prices will plummet to $20-$30/bbl by December, driven by low demand and a dearth of storage. Dr Verleger made his remarks in the Bloomberg on the Economy podcast with Tom Keene. The podcast aired on 20 July. “We’re about 5% away from the previous peak in global inventories, which was about 6.5 billion barrels of oil,” Dr Verleger said. “By September or October, we’ll have reached capacity, particularly for products. Essentially there will be much less demand for crude. The critical reason we’ll see a fall is that we’ve essentially made enough heating oil … to almost make it through the winter even if half the world’s refineries shut down.”
“There’s no place left to put the oil,” he said.
Dr Verleger said that prices will drop precipitously, rather than slide gradually. “Suddenly storage costs go way up, and as storage costs go up, people pay less for the crude.”
