Will US Shale Oil Undermine Its Own Success?.
The US shale revolution has remarkably influenced global energy markets over the past five years. Can falling oil prices tarnish the extraordinary success of hydraulic fracturing in the US and turn it into a victim of its own success?
The continuous fall in oil prices over the past five months has created a significant stir in global oil markets. Key reasons for this sudden fall lie in a combination of factors: weak demand in Europe and Asia, higher than expected levels of production in politically unstable areas such as Libya and Iraq, increased US production and OPEC’s decision not to cut production. The downward oil price trend might continue in 2015. Analysts predict that prices could fall to $70 and $80 for the WTI and Brent benchmarks respectively in the second quarter of 2015.
It is still unclear why the OPEC, and its leading member Saudi Arabia, decided to keep relatively high levels of production, considering the fact that the oil glut might additionally slash oil prices. One potential scenario allows the possibility that the Saudis are counting on the negative effect which low prices might have on the US shale producers.
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