Looking Forward – Effects of $50/BBL Oil
Risks. Rewards. Consequences.
Where we are today: Historic production growth begets precipitous drop in commodity prices – creating challenges and opportunities for industry.
Major technological advances in the application of horizontal drilling and hydraulic fracturing in the United States have dramatically expanded U.S. oil and gas production, transforming global oil markets. By the end of 2014, U.S. daily crude oil production from tight formations such as shale had increased 230 percent from 2010 levels, and U.S. crude oil production in total increased by 67 percent.
A confluence of separate but related factors– massive new supplies from the United States; OPEC’s unwillingness to reduce its output; and a slowing of global oil demand (especially in OECD countries) – has had profound impacts on the global price of crude. In June 2014, WTI crude peaked at $115/bbl. By January 2015, it had dropped below $46/bbl.