Long Financial News: 5 major factors causing oil prices plunged to $ 60

Published: 10:31:50 2014/12/11 10:31:50  Views: 489

Stunning collapse in oil prices is undoubtedly one of the headlines in 2014, and will remain for investors in 2015 is an important topic.

In fact, the US WTI crude oil futures fell 38 percent from the beginning of the year, almost equal to $ 60 on Wednesday's closing line, while Brent crude has fallen 42 percent so far this year.

Here we take a look at five of the major factors leading to oil prices hit since the 2008 financial crisis, the biggest decline.

First, shale oil

Turning to the oil price collapse is bound to talk about excess supply. And talk about an oversupply of shale oil is bound to talk about the United States. Sustained high oil prices help boost the US hydraulic fracturing technology revolution, and thus lead to North Dakota and other shale oil rich state capital prosperity in the region.

Oil prices will encourage energy companies to cut production projects, to suppress production of shale oil and other energy resources, but investors are keen to discuss specific on how sensitive shale oil production will drop in oil prices(http://www.fireinews.com/).

JBC Energy analysts said, 'In fact, we can even imagine shale oil output will initially remain at a high level, this is because many of shale oil producers desperately want to survive, while the cash flow for them to become was crucial. This will enable them to reduce excessive fracturing wells drilled backlog production business, while they focus on the most promising new oil assets. '

On Wednesday, the US Energy Information Administration data showed US December 5 week unexpectedly rose 1.5 million barrels of crude oil supply, which may indicate that the US shale oil producers are now as much as possible out of each from their existing wells a drop of oil.

Second, the oil price war

Not just the United States, other major oil-producing countries are also trying to produce oil. OPEC at a regular meeting in November this year, decided to maintain its production target of 30 million barrels per day unchanged, prompting crude oil futures plunged 10 percent(Finance News http://www.fireinews.com/). Many strategists think OPEC move as much as for the shale oil producers and other high-cost oil suppliers to launch a price war.

German commercial banks (Commerzbank) commodity strategist Carsten Fritsch said, 'which makes the price of oil is unlikely to rebound quickly, especially when northern Iraq and Libya about to inject additional supply to the international market when.'

Third, weak oil demand

Then we look at the other side of the equation of supply and demand: the demand side of the economic slowdown in China and Europe, oil demand growth inhibition.

IEA (International Energy Agency) 2014 oil demand estimate for 9240 barrels / day, reflecting an annual growth rate of only 680,000 barrels - the lowest in five years, the International Energy Agency expects global economic activity increased demand growth in 2015 will make 110 million barrels / day. Kay cast macroeconomists Julian • Jessup (Julian Jessop) said that this is to say, oil demand next year should be the oil price declines have occurred boost.

OPEC predicted Wednesday in its monthly report on its 2015 world oil demand this year from 2940 barrels / day decreased to 2890 million barrels / day.

Fourth, geopolitical concerns dissipate

Political tensions in oil prices this year who have been supporting the rising geopolitical year, for example, Russia in March this year, the annexation of the Crimean peninsula in Ukraine, Syrian civil war continues among large areas of northern Iraq, the Sunni insurgents have been invaded. But geopolitics risk premiums quickly dissipated as investors come to realize that all of geopolitical factors are oil supplies will constitute an imminent danger. For example, the major oil fields in southern Iraq are still without turmoil.

However, the market can not ignore the prospect of oil supply disruptions, and geopolitical shocks could still stimulate the rebound in oil prices.

Fifth, strong dollar

Commodity prices and the US dollar has a negative correlation. Commodities dollar makes dollar-priced oil for use in other currencies, such as the buyers are more expensive.

Measure of the greenback against a basket of six major currencies compete ICE dollar index since the beginning of the year rose by more than 10%. In addition, since May, the index has risen more than 11 percent. Deutsche Bank (Deutsche Bank), chief global strategist Binky Chadha think strong dollar is the main reason oil prices plummeted. After all, oil supply growth has been in existence for a long time, it is hard to believe only in the middle of this year investors suddenly awaken to the oil glut.

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Article Keywords: oil dollars

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