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Sunday, October 12, 2014

Factors Behind Lower Oil Prices

Jim Hamilton:

Lower oil prices: For the last 3 years, European Brent has mostly traded in a range of $100-$120 with West Texas intermediate selling at a $5 to $20 discount. But in September Brent started moving below $100 and now stands at $90 a barrel, and the spread over U.S. domestic crude has narrowed. Here I take a look at some of the factors behind these developments. ...

One factor has been weakness in Europe and Japan, which means lower demand for commodities as well as a strengthening dollar. ...

In terms of factors specific to the oil market, one important development has been the recovery of oil production from Libya. ...

But the biggest story is still the United States. Thanks to horizontal drilling to get oil out of tight underground formations... Just how low the price can go before some of the frackers start to drop out is subject to some debate. ...

    Posted by on Sunday, October 12, 2014 at 08:51 AM in Economics, Oil | Permalink  Comments (21)


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