OPEC’s decision ushers in new world of oil
Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday December 9, 2014
OPEC’s decision to cede no ground to rival producers underscored the price war in the crude market and the challenge to U.S. shale drillers.
Terence Corcoran: Nobody can truly say what the real price of oil should be — but looking at OPEC’s blowout, the world may be getting closer to the right number. Read on
The 12-nation Organization of Petroleum Exporting Countries kept its output target unchanged even after the steepest slump in oil prices since the global recession, prompting speculation it has abandoned its role as a swing producer. Thursday’s decision in Vienna propelled futures to the lowest since 2010, a level that means some shale projects may lose money.
“We are entering a new era for oil prices, where the market itself will manage supply, no longer Saudi Arabia and OPEC,” said Mike Wittner, the head of oil research at Societe Generale SA in New York. “It’s huge. This is a signal that they’re throwing in the towel. The markets have changed for many years to come.”
The fracking boom has driven U.S. output to the highest in three decades, contributing to a global surplus that Venezuela Thursday estimated at 2 million barrels a day, more than the production of five OPEC members. Demand for the group’s crude will fall every year until 2017 as U.S. supply expands, eroding its share of the global market to the lowest in more than a quarter century, according to the group’s own estimates.
mand for the group’s crude will fall every year until 2017 as U.S. supply expands, eroding its share of the global market to the lowest in more than a quarter century, according to the group’s own estimates. (Source: Financial Post)