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Pulse Price Report: Oil Giants Ending Exploration

Morgan Stanley reported that oil discoveries in 2015 fell to their lowest level since 1952. Companies are cutting their budgets for seeking out new oil reserves following the price collapse and a questionable future for the commodity.

While oil has seen a price rally since its historic lows at the end of 2015, the low prices cut into oil companies’ reserve funds. While prices still remain on the low end of what is profitable for oil companies, the discovery of new oil reserves is one of the first things to go.

There will be no shortage of oil in the near future as many oil fields are still abundant, but in the long term, this slash in new discoveries may dwindle down the supply.

This lowering of supply will lead to a future increase in price, pending the decreased demand of oil as nations begin to move to other forms of sustainable energy.

Oil companies will look forward to this future increase in price as they eat the costs of today’s low oil prices. The future price increase may even put enough money back into the coffers of oil discovery.

Still, Morgan Stanley reports that this could be the beginning of the end for massive oil exploration.

“The return on exploration dollars spent has clearly deteriorated in recent years. On top of this, oil companies increasingly need to consider scenarios for oil demand in which there may not be much need for further exploration.”

 

Crop prices (May 31)

Rio Creek Feed Mill – Algoma

Commodity Price (per bushel) Basis
Corn $3.68 -0.45
New-Crop Corn $3.63 -0.51
Soybeans $10.06 -0.81
New-Crop Soybeans $9.81 -0.75
Wheat (SRW) $4.11 -0.71

 

Fox River Valley Ethanol – Green Bay

Corn $3.73/bushel -0.40
New-Crop Corn $3.71/bushel -0.43

 

Basis: The difference between the local cash price for a commodity and the Chicago cash price (where the Board of Trade sets national futures price).

 

Gas Price Averages

United States: $2.32

United States one year ago: $2.74

Wisconsin: $2.38

Wisconsin one year ago: $2.72

Northern Door: $2.51

Sturgeon Bay: $2.47

 

Other Commodities

Gold: $1,213.30/troy ounce

Silver: $16.01/troy ounce

Oil: $49.89/barrel

 

Sources: aaa.com, agweb.com, gasbuddy.com, cnn.money, The Economist, BBC World News

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