Orlen: Oil prices at ca. $50 for the next 1-2 years

Oil prices below $50 per barrel are not possible to maintain in the long-term horizon, but in the next 1-2 years they will remain around that level, according to Adam Czyżewski, chief economist of PKN Orlen. “Technological revolution in the extraction sector, which resulted in a crude oil boom, caused a change in the price shaping mechanism. Oil prices will be determined by extraction costs and not by the budgetary needs of the OPEC countries,” Czyżewski told ISBnews. In the nearest future, prices will be shaped by the oil supply surplus. Additionally, negative consequences of limited investments in extraction will be felt not earlier than in a year’s time. From the point of view of Orlen, the current slide in oil prices are positive as they translate into higher refinery margin profits and bigger net profits. In the last 6 months, oil prices fell from $116 per barrel  in June to $48.5 on January 16.