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CREDIT SUISSE: Oil is going stay low for 5 years

Dec 22, 2015, 22:09 IST

Oil prices have plunged from triple digits over 18 months ago to less than $40 a barrel, and companies, markets and the global economy have been ravaged by cheap energy.

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Brent crude oil prices hit their lowest level in more than 11 years this week and are currently trading around $36.14 per barrel as of 4.22 p.m. (GMT) today - far cry from over $100 per barrel in the summer of 2014.

And according to Credit Suisse's 2016 Global Outlook report, the pain of low oil prices will continue until 2020 at least.

Here's the fateful chart which shows that while oil prices are set to double from their current level to around $60 per barrel by 2020, this is still dramatically less than what it was last year:

Credit Suisse/Bloomberg

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Credit Suisse's global head of research Ric Deverell and his team said:

In our forecast, low prices force the rebalancing of global oil supply and demand. The partial recovery of price next year is required to resuscitate some supply growth into 2017, in our central scenario.

At around $65/b WTI and $70/b Brent, the industry should be able to generate enough supply growth to match basecase demand growth in the medium term, if indeed Opec supplies grow as well - from Iran and later from Iraq, Libya, and possibly Saudi Arabia as well. As for risks, plenty remain.

Britain's oil and gas industry is in a crisis. Dwindling production and low prices are killing off company profits and jobs in the process.

In fact, things are so bad that the number of jobs has fallen at its fastest rate since 2004, according to research by the Aberdeen and Grampian Chamber of Commerce.

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The group estimated that 65,000 jobs were lost in the UK oil industry in 2014 and a further 5,000 were lost in 2015.

In November, Graves & Co, an energy industry consultancy, said oil and gas companies have laid off more than 250,000 workers around the world, a tally that will rise if oil prices remain in the dumps.

NOW WATCH: Jim Cramer told us about his 'vicious' daily routine which starts at 3:45 AM and doesn't end until after 11:30 PM

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