The oil game. Why the United States has increased production and how it has shaken the stability of OPEC
On the world market prices for oil remain relatively low – about $ 50. Two years ago the cost was two times higher. The US do not pay attention to the low prices and continue the commissioning of new rigs, doubling their number over the past year in two times – up to 765.
So the US provoked oil cartel OPEC, which has teamed up with Russia. They agreed to cut production, so prices went up. However, paper agreements are not helped, and the United States had achieved clear market of a different kind. This writes Die Welt.
The best cure for low prices is low prices. In this case, the market is self-cleaning. This is one of the main market rules. If prices for a particular product remain low, sellers are leaving the market. And if the proposal falls, prices grow again automatically.
Analyst at research firm Global Risk Management Michael Poulsen predicts that the clearing of the market will happen much later.
Thus, there are two important aspects. On the one hand, energy companies hope that the global demand for oil again will grow significantly. Given the simultaneous economic recovery, this assumption does not seem too bold. On the other hand, mining companies have significantly reduced their costs. For companies mining pays off at low oil prices. Especially for companies that rely on shale oil. The process involves the extraction of raw materials from the rocks, and the technology is constantly improving.
“While it is impossible to say exactly what the price will balance supply and demand. Oil shale industry is constantly evolving, it is responsible for a new world order in the oil sector,” notes Goldman Sachs analyst Jeffrey Currie.
In his opinion, the industry has too many investments aimed at the installation, making the production more efficient and at the same time prevent bankruptcies. He predicts that the price of oil could fall below $ 40 before the market clears. Now Brent is trading at nearly $ 49, the American grade WTI is about $ 47.
This is a provocation against the oil cartel OPEC. At the end of may, the member countries agreed to further reductions in production and attracted to the process of Russia, the largest oil-producing country. The goal was to reduce the glut in the market. Now it turns out that agreement is clearly not enough. It seems that billions of dollars has helped the American oil shale industry to break the power of the cartel and carry out the cleaning market is a very different kind.