Is OPEC Keeping Up Production To Drive Down Prices
While there were no major developments in oil yesterday, today also movement might remain ranged as markets lack any major data variables whereas traders await weekly inventory report from the US. Iraq continues to drop the price of its oil as it increases production. In past years OPEC would reduce production to support prices, but this year many OPEC nations are increasing production to just sell more at lower prices as the US shale production increase has become a factor. Libya is steadily increasing its production after several years of violence had reduced their production levels much lower. Many foreign nations are worried now that the US has become a net producer of oil and is steadily increasing its exports and changing laws that allow the export of many varieties of oil products. Shale production is very expensive and many nations are hoping that lower prices will combat the growing shale production in the US and other nations. The U.S. is producing more crude oil than it has in nearly 30 years. Production is forecast to reach 9.5 million barrels a day next year, which would be the most since 1970, according to the U.S. Energy Information Administration. The boom is a result of drilling shale rocks through the techniques of fracking and horizontal drilling, and the question is how high oil prices need to be in order to make it profitable. Other factors include a weakening global demand for oil and the increase in Libyan oil drilling over the summer (the troubled nation managed to boost its output from 200,000 barrels a day to 900,000 by the end of September), according to EIA analyst Michael Leahy.