Brent Crude price showed the lowest of this month which is $106.77 and may go down to $80/barrel according to the Saxo Bank prediction. Will price determinants, supply and demand and market sentiment work in favor of Brent Crude? The report says no. If no the why? Experts looks at the increase production from Saudi and rising non conventional method of oil extraction.
EIA, Energy Information Administration expects production from non-OPEC countries would grow to around 2million year on year. The oil production from Libya, Iran are supposed to rise as the civil unrest and other restrictions imposed are getting eased. Among the futures traders, hedge fund short position, increased supply of the US shale oil, and solved transportation issues also will contribute to the rein on the climbing oil prices.
The advanced technology used by the US has helped them in extracting more oil from shale rock ie Kerogen oil. Even though production of shale oil is highly underestimated by the market, it will become prominent in the future. This will result in bringing down oil prices
Now the question is whether the increased production will challenge the Russian
dominance. Currently Russia is the largest oil and gas producer and their position can be in a question since the Russian technology on il extraction is still not at par with the US. The US produces 22 million barrels while there is no such authentic data on Russian oil production other than report from Moscow which says Russia produces around 21 barrels/ day.
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