Over the past few years, many experts have not ceased to wonder why the price of oil is falling and how long the bearish sentiment will drag on. Over the past five years, 4 global falls have been recorded in the oil market. Bear cycles repeated 14 times, and this is from the beginning of 2000. Despite the instability of the situation, the price per barrel always safely returned to its starting point.
The biggest oil price drops in the 21st century
The global fall in oil prices in the history of the market was tracked on the history of WITI quotes, which, starting in 2011, were replaced by the Brent fuel brand. There are five in total:
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year 2001. By January 19, 2001, the price of oil was $ 32.2. By November 5, 2001, the cost dropped to $ 17.5. For 10 months, the price of a barrel fell by 48.5 percent.
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2006 year. On July 14, 2006, the price per barrel of oil was $ 77. Already on January 18 of the following year, the price reached $ 50.5. Within 6 months, a price drop of 34.5% was recorded.
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Summer 2008 On July 3, 2008, the price per barrel was $ 145.3. After 2.5 months, namely September 16, another low was recorded on the indicator - $ 91.2.
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Fall 2008 By September 22, after a recent fall, oil had rolled back to $ 120.9, and by December 19, the stop had a price of $ 33.9. In just three months, the price of a barrel of oil fell 71.9%.
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Spring 2011 April 29, 2011 the price reached 113, 93 dollars per barrel. But on October 4, a new low of $ 75.67 was already recorded on the daily chart. The fall lasted 5 months, the price fell 33.58%.
Why is the oil price falling and how will the situation develop in 2015?
Oil is the base of all energy carriers on which almost all civilization is built. It is simply impossible to imagine a modern society without gasoline, kerosene and diesel fuel. That is why the question of why the price of oil is falling is seriously worried not only by economic analysts, but also by most people in the world. The situation is of interest to almost every expert in this matter.
Residents of Russia pay special attention to oil prices. This is due to the fact that a drop in the cost of fuel led to a decrease in the ruble exchange rate. The dollar is growing rapidly, and the ruble simply collapsed. People stop keeping their savings. They either invest in the purchase of household appliances or in improving their living conditions, or convert liabilities into foreign currency at a far from favorable rate.
Despite last year’s forecasts, today oil prices are falling. 2014 ended with another decline in the cost of a barrel. The long-awaited trend reversal did not take place, the situation remains unclear.
Analytics in numbers
World prices for Brent oil (this brand is one of the most demanded, a general analysis of the market is made by moving its price) in January-February 2014 stopped at around 107 dollars per barrel. In early October, one barrel of oil could be purchased for only $ 90. This is a significant cause for panic in states whose economic activity is based specifically on energy exports. At this price, the situation did not stabilize, and by December 11, the price chart drew a new low - $ 64. Today, buyers are willing to give no more than $ 59.5 for fuel. It turns out a very interesting situation. Demand for fuel is systematically increasing, and the price is falling.
Reasons for falling prices in the world - OPEC policy
Unambiguously answer the question: "Why is the price of oil falling?" problematic. The situation was formed by comparing several factors at the same time, which, according to economic analysts, were created artificially.
The price of oil per barrel has changed significantly in connection with the policies of the OPEC member states. The amount of oil produced is increasing every day. In August 2014, a record was reached. The volume of oil produced amounted to 30.5 million barrels per day. Over the past 5 months, this indicator has remained at a stable level. Previously, the daily oil production rate was 30 million barrels. An increase of 0.5 million in production combined with other factors had a significant impact on the market crash.
Libya, Saudi Arabia and Kuwait: Impact on the Oil Market
Venezuela, Iran and 4 more states that are part of OPEC warned of an impending fall in prices. According to experts, a significant increase in the cost of a barrel is possible with a decrease in fuel production by just 415 thousand barrels. As a result of the refusal to reduce production volumes by Saudi Arabia and Kuwait, the situation became tense. The voices of states have become decisive, since it is Saudi Arabia that accounts for about 300 million additional barrels of oil. The situation was aggravated by the economic recovery of Libya, which finally emerged from martial law and rejoined the number of dominant players in the oil market.
US Role in Oil Pricing
The fall in oil prices was caused by actions on the part of America, since there are a fairly large number of deposits of this mineral on its territory. The government of the state, in order to avoid shortages, has issued a law banning the export of crude fuel. At the same time, the United States has been the main consumer of oil in the world for more than a decade. The huge volumes of fuel that the country was buying supported the cost of fuel. The price of oil per barrel remained at a fairly high level.
The decline in oil prices in September 2014 coincided with an increase in domestic fuel production. The daily production rate stopped at 8.7 million barrels. According to analysts, in the coming months, the figure will increase to 9.5 million barrels. As a result, oil prices are falling, the main consumer has left the arena. Moreover, having found loopholes in the legislation, large companies began to export their fuel to the world market. This volume of oil has not been produced in the country since 1987.
Diagonal "overproduction - consumption"
The fall in oil prices was a real blow to the economies of states that live off energy. Daily fuel consumption is 92 million barrels. Due to the deficit in the global fuel market, its price was at a fairly high level. A sharp jump in the extractive industry to the level of 93.8 million barrels led to overproduction. The result is quite obvious. When a product is larger than buyers, its price decreases due to reduced demand. As long as efficient fuel production continues, the situation will only worsen.
