Quote:
Until recently the oil price was largely underpinned by the marginal cost of the last
barrel needed to match demand, with some political and economic conjuncture mark-ups or -downs.
This currently puts a structural floor of $110 a barrel under the oil price (WTI).
The largest part of the $110 a barrel floor (about 70-75%) is determined by the marginal
cost of supply, currently around $80. The remaining $30 a barrel (or 25-30%) is determined
by supply-demand fundamentals, a short-term risk premium, and long term scarcity and policy.
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