You can’t make these things up, and reality is stranger than fiction. Who would have thought at the start of year in Jan 2014 that we will see almost 50% cut in crude oil prices by Dec 2014? Gas prices in hit another milestone on Monday in the United States: AAA reports that the national average price for gasoline has fallen for a record 88 days in a row. Gas prices have dropped every day since Sep 25th, to the current national average of $2.39 per gallon. The ongoing North American shale oil boom, along with a slow-down in global economy and OPEC’s recent decision to continue its crude oil production at current levels without production custs, have all combined to push down the price of crude oil by around 40 percent since this past June. Read More>>
OPEC members have agreed to cut crude oil production. This is the first such agreement since 2008 and it will help narrow the demand-supply gap faster than expected. OPEC has decided to cut production by 1.2 million barrels per day to bring their production down to 32.5 million. For the first time in 15 years, Russia has agreed to participate in cutting production and has announced a cut of 300,000 barrels per day. The International Energy Agency (IEA) had warned that oil stockpiles, which are already at record levels, would expand for a third consecutive year in 2017 unless OPEC cut production. As per the IEA’s estimates, they were at 300 million barrels of oil, enough to fill 150 supertankers. Most of the oil inventory is presently stored in these floating supertankers. The OPEC cut is also positive for US oil & gas producers as we may have $50 as a near-term floor for crude oil prices.