While oil prices have plummeted from more than $100 per barrel in July to less than $70 this month, energy analysts expect prices to rise next year and into 2016.
Crude prices will average about $10 per barrel higher next year than current levels, according to a Reuters survey of 31 analysts and economists. Prices for Brent crude, an international index, closed at $69.92 per barrel Wednesday.
Oil prices have tumbled after the 12-member Organization of Petroleum Exporting Countries decided against cutting production last week.
Some members, such as Venezuela, wanted a cut to boost prices. But Saudi Arabia, the world’s top oil producer and the primary player in OPEC, wanted to keep the faucet flowing to preserve market share amid competition from the United States.
The House of Saud is betting that prices can fall low enough to shutter some U.S. production. Saudi Arabia said this week it thought oil markets would stabilize around $60 per barrel.
But Saudi Arabia is likely placing a losing bet, largely because U.S. producers have found ways to reduce their operating costs in the nation’s shale energy regions.
Hydraulic fracturing, or fracking, wells used in those areas carry higher costs than conventional wells drilled in most of the world, but technological advances make extracting hydrocarbons more efficient. Some more expensive, less mature wells might feel the strain from lower prices, but most analysts expect the U.S. shale gale to persist.
