Citigroup Inc (C), Waste Management, Inc. (WM): What Shale Gas Means for Oil Prices

Meet the oil bears
At any rate, Morse reckons that the transition toward natural gas as a transport fuel will accelerate over the next few years, spurred on by government assistance and by the environmental benefits of natural gas powered vehicles. This shift, Morse argues, will reduce global oil demand by a whopping 3.5 million barrels a day by 2020.

So what do Morse’s prognostications about a near-term peak in global oil demand mean for oil prices? In a nutshell, he thinks prices are headed lower over the next decade and estimates Brent crude oil prices to “hover within a range of $80-90/bbl” by 2020.

While Morse’s view isn’t a mainstream one, there does appear to be a growing chorus of oil bears. Recently, Paolo Scaroni, chief executive of Italy’s Eni, one of the largest energy companies in Europe, said that the combination of stagnant oil demand and soaring new supplies implies that oil prices are “more likely to go down than up” over the next two to five years.

Scaroni’s view is predicated upon a similar rationale – that the huge disparity between oil and U.S. natural gas prices (on an energy-equivalent basis) is an anomaly that cannot be sustained much longer. Over time, he argues, market forces will correct this price disparity. “These two anomalies, once corrected, move us toward a world in which gas prices are higher and oil prices are lower,” he suggests.

What do you think? Are Morse and Scaroni on to something? Or will emerging market demand outpace oil supply growth? Or, alternatively, is there simply just no point in trying to predict where oil prices are headed?

The article What Shale Gas Means for Oil Prices originally appeared on Fool.com.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Clean Energy Fuels, Ford, United Parcel Service, Waste Management, and Westport Innovations. The Motley Fool owns shares of Citigroup Inc (NYSE:C) , Ford, Waste Management, and Westport Innovations.

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