This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The price of November US light crude oil fell sharply today, dropping more than 1% to complete its fourth losing week in the last five.
Crude oil has been supported since the late summer by geopolitical issues, with tensions in Egypt and Syria causing traders to price in a premium for the risk that the instability posed to Middle Eastern supplies.
That helped to disguise the fundamentally bearish picture of the shale boom in the US. With tensions having eased since in the Middle East, the commodity is now being pressured both by the potential impact on fuel demand posed by the US government shutdown and the prospect of oil production expanding next year in the US.
‘With output of more than 10 million barrels per day for the last two quarters, its highest in decades, the nation is set to become the largest non‐OPEC liquids producer by the second quarter of 2014, overtaking Russia,’ the Paris-based IEA said today.
US oil output has spiked in the last couple of years on account of new techniques, such as horizontal drilling and fracking, that allow access to previously untapped subterranean reservoirs trapped in shale rock formations in the Midwest.
The IEA sees the increase in US production leading total non‐OPEC supplies to rise by an average of 1.7 million barrels per day next year, which would be the fastest rate of growth since the 1970s.
The IEA also slightly lowered its 2014 forecast for worldwide oil demand growth in 2014.