The price of Brent crude oil fell with 1% during the Asian session on Tuesday after a day earlier asset account unexpectedly sharp rise. In the last minutes of the session in Tokyo a barrel of Brent crude for delivery in January traded at 72.11 USD per barrel day decline of 1.07%. At the same time WTI crude oil also with January delivery lost 0.78% of its value to 68.47 USD per barrel.
The crude oil prices fell by nearly 40% over the past five months, taking into account the longest negative series of monthly losses since the crisis of 2008. The main reason is the sharp increase in demand, led by the “shale revolution” in the United States that substantially exceeds demand. About the latest setbacks prices of Brent and WTI became the decision of OPEC (OPEC) to keep its production ceiling of 30 million barrels per day.
Saudi Arabia and OPEC no longer have a mechanism for balancing the markets on the supply side. The markets will have to be self-balancing. While understanding how to do it, instability will be greatly exaggerated, commented analysts.
SocGen reduced its forecast for the average price of US crude oil to 65 and 70 USD per barrel respectively for 2015 and 2016.
Saudi Arabia provoked debate on the energy markets, after decreasing its official selling prices for some customers in four consecutive months to November. Part of the situation in the energy markets is also related to supply conditions. Increased production of American oil led to a glut on the world oil market. US already produces about 8.9 million barrels per day, while Saudi Arabia – the largest producer in the world, produced about 9.6 million barrels per day.
The falling oil prices are unprecedented test for manufacturers of unconventional oil showed you on Monday by the International Energy Agency (IEA).
The crude oil producers in the United States compete hard in their actions with extraction of raw materials through the so-called method hydraulic fracturing, even in conditions of lower oil prices. According to some experts, however, this process will be delayed namely pressure on already low prices, which could again push up the market in the medium and long term.