Oil price comes off the boil as shale oil surges

US shale oil producers may be able to keep oil prices in a range around current levels.

"Something potentially seismic" happened last week, says Jeremy Warner in The Sunday Telegraph. Oil prices slumped sharply. US WTI futures lost 7% and tumbled through the $50-a-barrel mark. Brent crude, the other key benchmark, has also slipped to a four-month low. Bullish speculators had piled into oil futures, so when the trend changed they all rushed for the exit, exacerbating the downdraft. But the underlying problem is that the glut everyone thought would be shrinking by now just isn't. "There is little to suggest as yet that market tightening has begun," as Commerzbank puts it.

Prices bounced in late November because the oil exporters' cartel Opec and some non-members, notably Russia, agreed a plan to cut oil output. However, US production, some of which Opec had hoped to cut permanently when it flooded the market in 2014 to drive US shale producers out of business, has bounced back rapidly. Last week US stockpiles reached a new record.

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Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.