Published on : Dec 18, 2015
The growing global shale oil market is affecting the global economy in a major way. The rapid rates of industrialization and the increasing density of population have collectively created a massive increase in demand for oil and gas. In the advancing technologies used for exploration and extraction of oil and gas, arrived the concept of shale oil drilling. Shale is a sedimentary rock that consists of kerogen and was touted as one of a keystone in reducing the pressure on onshore and offshore oil drilling. Shale oil has been used to improve the amount of energy and electricity that an economy generates in order to grant an increasing number of employment opportunities.
The situation is not as perfect as planned, however. A global oversupply of oil is now creating multiple problems in the oil and gas sector. Oil prices have fallen by almost 2.0%, for instance, this Thursday. Brent trading is now close to 11-year lows. New data shows that fresh supply of oil is building up at the U.S. crude futures delivery point, worsening fears of a global oil glut.
There has been an increase in the oil inventory of nearly 1.4 mn barrels the delivery hub in Cushing, Oklahoma. This delivery hub is for the U.S. crude’s WTI futures, as stated by traders.
Caprock Risk Management founder Chris Jarvis, said that the bearish fundamentals are currently looming over the oil markets without showing any sign of relief in the near future. At the same time, the dollar moves higher.
The dollar reached a two-week high despite the oil glut, making oil and other greenback commodities less affordable to the economies that use the euro and other currencies.
A 72 cents fall was registered by WTI, which amounted to US$34.80 per barrel, achieving a session low of US$34.63. WTI was also hit by a seven-year low on Monday, reaching US$34.53.
The global crude benchmark, Brent, was down 30 cents to reach US$37.09 per barrel. It traded less than US$1 more than its low registered in 2004.