Everyone who divested should be beaming about doing well by doing good: The last time oil and gasoline prices fell this low was in the wake of the 2008-9 financial collapse, when crude oil fell from well over $100 to below $40 a barrel in a matter of months. Energy analysts say the current price slump is of an entirely different nature, based primarily on a glut of oil being produced in the United States, along with increased production in Canada, Iraq and a handful of other countries. While in the past the Organization of the Petroleum Exporting Countries has sometimes agreed to cut back production to shore up prices, Saudi Arabia and other Persian Gulf producers have decided to protect their global market share by cutting prices in the United States and Asian markets while increasing production somewhat. In a recent interview with Middle East Petroleum and Economic Publications, based in Cyprus, the Saudi oil minister, Ali al-Naimi, indicated his country would remain steadfast rather than cut production anytime soon. “If I reduce, what happens to my market share?” Mr. Naimi said. “The price will go up and the Russians, the Brazilians, U.S. shale oil producers will take my share.” Adding further pressure to prices is the weakening demand for oil and petroleum products in Europe and developing nations. That weakness is compounded as increasingly efficient vehicles come onto the market and China seeks to reduce the oil dependence of its economy. There is little reason to believe any of those trends will change until midyear at the earliest, energy experts say. According to Simmons & Company, based in Houston, the 93 million-barrel-a-day global market will continue to be oversupplied by at least one million barrels a day during the first half of 2015.
Posted on: Tue, 06 Jan 2015 03:46:53 +0000
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