Rice expert: $50 oil is the new $70

EXPERT ALERT

Jeff Falk
713-348-6775
jfalk@rice.edu

Rice expert: $50 oil is the new $70

HOUSTON – (June 8, 2016) – U.S. crude oil prices climbed above $50 a barrel Tuesday for the first time in nearly a year, providing energy companies in Houston and Texas hope that a long-awaited recovery is finally taking shape.

Credit: shutterstock.com/Rice University

Bill Arnold, professor in the practice of energy management at Rice University’s Jones Graduate School of Business and a former energy industry executive, is available to comment on this development and the future price outlook.

“It’s important to recognize that it’s a dynamic market,” Arnold said. “Costs have been cut and efficiency increased during the downturn. As a result, $50 oil is the new $70. If companies and creditors feel this is sustainable, the response could be strong. But having been burned by the double dip last year, companies may hold off for a while.”

Arnold said trading operations in the industry get little attention, but sources told him that “2015 had been the best year in a long time, and 2016 will blow past that. Successful traders make their money from volatility. Gas prices are up 25 percent in a few weeks, and oil is nearly double the low. This provides opportunity — and risk — depending on how traders positioned themselves.”

Meanwhile, several international factors favor tighter supplies, he said, from the terrorism in the Nigerian oil fields to the collapse of the Venezuelan economy and the broken supply chain in Brazil.

To schedule an interview with Arnold, contact Jeff Falk, associate director of national media relations at Rice, at jfalk@rice.edu or 713-348-6775.

Rice University has a VideoLink ReadyCam TV interview studio. ReadyCam is capable of transmitting broadcast-quality standard-definition and high-definition video directly to all news media organizations around the world 24/7.

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Follow the Jones Graduate School of Business on Twitter @ricemba.

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Related materials:

Arnold bio: http://business.rice.edu/person/william-m-arnold.

Jones Graduate School of Business: http://business.rice.edu.