Prodigy Oil and Gas,
The recent plunge in oil prices, roughly from $100 a barrel to current prices hovering in the $60.00 per barrel range deserves some analysis and reflection concerning the underlying causes for the downturn. Senior partner of Silver Tusk Oil Co, Shawn Bartholomae has made the following observations:
“A major factor in the recent decline in oil prices is due to the global economic slowdown. Two major Asian players, China and Japan are both experiencing lesser economic growth than what was earlier anticipated.”
It had been the expansion of these economic systems and their need for a growing volume of energy imports that had provided much of the momentum for the preceding surge in oil prices. This surge in demand had prompted the resultant growth in world production for the past five years.”
The slow down in that part of the world is being felt in international markets.
The EIA (Energy Information Administration) made the following note:
“Since August, both crude oil and currency markets have been influenced by lower economic growth expectations in countries outside the United States. Prices in both markets recently have broken out of established trading ranges, driven by concerns about weaker future global demand. The current situation, with the dollar index and oil prices moving in opposite directions, presents a sharp contrast to one in which crude oil supply disruptions or geopolitical risks would cause both the dollar index and crude prices to rise”
Shawn Bartholomae also has stated “The booming production levels from the shale formations across the country are having an effect. This revolution is changing the petroleum outlook of the world. It is not the production of oil alone that is changing. With this surging production comes a new wave of technology.”
The technology of finding and producing oil is not only making oil and gas wells more productive, the technology is opening up new territories for exploration. It is making exploration possible in formations that were once considered out of reach or technically non feasible.
Another large factor in what has been falling oil markets is the apparent determination of Saudi Arabia to hold steady to current production levels. The world had grown accustomed to giving Saudi Arabia the center stage and letting this nation call the shots.