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Citigroup Calls For $20 Oil as Energy Industry Layoffs

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Published on : Feb 11, 2015

The U.S. energy industry layoffs announced yesterday has hit a record high of more than 20,000, says new analysis from the Bank of Montreal. 

Due to the layoffs, the job losses could rate higher than the 60,000 in the U.S. in the current year, said senior economist at BMO. The U.S. economy will create around 2.7 million jobs in the present year. This will swamp the oil and gas losses and Canada may not be so lucky. The country has faced a lackluster job growth and recent downgrades to economic growth. Thanks to the falling oil prices.  

The Canada’s oilsands and the U.S. shale oil fields are the most expensive oil-extraction markets across the globe. They are largely considered as the most vulnerable when it comes to price shock.  

The Citigroup gave bad news for the energy industry on Monday. The company predicted that oil prices could slope down as low as US$20 per barrel. This shock could mean the effective end of OPEC and thanks to the growing stockpiles and growing levels of production.  

This could not decide the bottom point due to the oversupply and economics of storage falling below $40 a barrel for WTI. 

The West Texas Intermediate has as low as the $20 range for some time, added the head at the Economic Times. 

Things look unlikely for OPEC to return to its old pattern of doing business. The end of OPEC might be different, quoted at Bloomberg.  

The International Energy Agency positively forecasts for oil prices this week and says they expect to rise back soon. However, they would not return to the $100 plus levels seen last year. 

Canada’s crude output is forecasted to grow now and at the end of the decade. In a latest report, Canada’s production will boost to below five million barrels per day by the end of 2020. It will reach 810,000 barrels a day as compared to 2014.