Experts are predicting that the price of oil should drop dramatically this year. Some are indicating that the prices oil may drop to as low as $50 per barrel and others are indicating that the price of a barrel of oil will increase. While there is no way to gauge where the price of oil will be in 2013, oil production is up in the United States.
A Surplus of Oil in the United States May Lead to a Drop in Prices
Currently, the United States is one of the leading non-OPEC producers of oil in the world. With this unexpected surplus, the U.S. has more oil than it needs or can export, so this is why the price of oil is expected to drop in 2013. As a result, there is now a surplus of oil. This surplus can mean good things for those who are interested in investing in oil in 2013. Although there are varying opinions as to how much the price of oil will drop in 2013, all the top analysts concur that the price of oil is headed downwards.
Experts Predict That Drop in Oil Will Not be Everlasting
Many believe that the drop in the price of oil will only be temporary. However, others indicate that the drop in the price of oil could last much longer. According to several analysts the expected drop in the price of oil will be directly related to the fact that the U.S. generated nearly one million barrels of oil per day last year. This increase in production has led to a tremendous surplus in oil. Investors who have been looking for a ground floor opportunity should consider investing in oil this year.
After The Price of Oil Drops U.S. Oil Production and Export May Level Off
Experts predict that the drop to $50 a barrel for oil will ultimately have an impact on production and lead to a change in export rules. Experts theorize that this change will ultimately drive prices up again. Currently, there are no export rules in place that prevents oil from being exported. With no export rules in place, oil production in the United States will not be tapering in the near future. However, when the price of oil finally drops to $50, experts predict that the export rules will be modified and oil production in the U.S. will begin to taper off. However, many indicate that this is merely the beginning and oil production will continue to increase.
Oil Surplus in the U.S. Will Make 2013 The Best Year to Invest in Oil
With the U.S. producing much more oil than expected, this may be one of the reasons why this is the year to invest in oil. While no one knows when the price of oil will drop, individuals who have been thinking about investing in oil for a very long time may finally get the chance to buy oil at the lowest it has been in years.
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Dennis Lynn is an investment strategy blogger. He wrote this article on behalf of Audubon Engineering, a leading oil project and construction management firm.