Page 11 - ITA Journal 3-2018

Fig. 7: US crude oil stock volume as per October 2, 2018 Source: EIA
down to 30 US$ / barrel. But as long as US political intervention keeps the available oil volumes low, the oil price will remain high.
The OPEC countries and some other partner countries such as Russia are currently reducing the oil volume offered to the world market by about 1.8 million barrels/day.
International Energy Agency (IEA) gures show it expected oil con- sumption to increase this year by about 1.4 million barrels / day. At the same time, it has predicted an increase in production by non- OPEC countries such as the US of at least 1.7 million barrels / day. Citigroup analysts are predicting
Market information
hitting 52 US$ in August 2017 (Fig. 6), mainly thanks to the OPEC countries and their explora- tion partners reducing output to minimize the glut.
As of October 2018, oil prices have climbed to a four-year high of about 85 US$/barrel.
This most recent oil price rally is in large part due to the political intervention of the US govern- ment. The sanctions imposed on Iran and Venezuela, although not yet fully in place, have already created an arti cial shortage of available pumped oil bpd.
The climbing prices are re ected in the fact that the crude oil stock volume in the US has recently been increased. Normally, if rising crude oil prices are expected, the storage volume increases, whereas falling crude oil prices lead to an erosion of the crude oil stock volume.
Given that many oil-exploring countries have production costs ranging from 30-40 US$, it is unsurprising that the industry reacts with the utmost sensitivity to current oil price developments (Fig. 8).
However, the entire shale gas exploring industry, regarded in 2014 as a highly attractive indus- try segment, saw itself forced by the low oil prices of 2016 and 2017 to reduce its cost level to about 24 US$ / barrel (Fig. 8) – with the result that its selling price is now much lower than the current price offered for crude oil by the market. In consequence, shale gas production is booming again. Some US analysts are warning that the current situation bears similarity to the rst shale gas ood offensive in 2014, when oil prices dropped from 110 US$
Fig. 6: Crude oil Brent price as per October 2, 2018 Source: NASDAQ
ITAtube Journal No3/October 2018
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