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Extraction in the United States – one of the reasons for the fall in oil prices
Brent fell more than 40% after its peak four years in October
In early October, oil prices jumped to $ 86 a barrel and then began to fall rapidly. The price of Brent fell below $ 50 per barrel at the end of December.
The main factors behind the drop in oil prices are increasing. This is an oversupply due to the shale boom in the United States and the inhibition of global economic growth. Correspondent.net tells the details.
At the time of the fall of oil
In the first five months of 2018, oil prices reached 80 dollars per barrel, an increase of 21% since the beginning of the year. # 39; year. Then, the oil has slightly lost its vigorous growth.
On December 24, the price of Brent crude fell to $ 49.93 per barrel. As a result, the price of oil dropped by more than 40% after the four-year high in October.
At the first auction after Christmas on December 26, oil rose 8% per day, up to $ 55 a barrel of Brent. Brent oil is currently trading at $ 53 per barrel.
Fluctuation of oil prices in 2018
Causes of falling oil prices
The United States: trade Donald Trump and China clouded the outlook for World Economic Growth, written by Bloomberg . This means that the demand for oil will be lower than its price.
In addition to the tariff dispute between Washington and Beijing, an increase in interest rates in developing regions and a decline in indicators in the euro area led to a 0.2% decline in the IMF's share of the projected global economy. It also caused the fall of oil.
One of the reasons for the reduction in the price of oil is also called investor reaction to the situation related to the adoption of the budget of the United States. Trump refused to sign the document unless it included financing the construction of a wall on the border with Mexico – the main pre-election promise. It is the Democratic Party that opposes it.
High oil prices, set early in the year, boosted world output growth. Only from May to November 2018, it increased by 2.5 million barrels a day.
In addition, at the end of 2018, financial and speculative factors also put pressure on the oil market. Thus, the S & P 500 in the broader market fell by 15% in December, posting the lowest numbers of the year, followed by oil prices.
OPEC Agreement +
On December 7, OPEC countries and Russia agreed to reduce oil production by 1.2 million barrels per day in the first half from 2019, in the hope of keeping prices at a high level.
The sixty years of OPEC's existence have not been confronted with such an acute problem, writes Bloomberg . For many years, OPEC and Russia have been able to control the market equilibrium: if the cost of oil dropped, production increased; if oil is more expensive – they are shortened. This ensured the income of the exporting countries.
Now, as says Bloomberg control of the oil market is in the hands of three people – the President of the United States, the President of Russia and the Crown Prince of the United States. Saudi Arabia, Mohammed ibn Salman. They will determine oil prices in 2019 and then, according to the agency.
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