The shale boom and its consequences
US crude oil production rose to a 20-year high at the start of 2013 thanks to the shale oil production. Although the US is set to become the world’s biggest oil producer temporarily in a few year’s time, it will still remain dependent on oil imports. In Canada, oil production from shale oil and oil sands is also rising significantly. Local oversupply is pushing down the prices of WTI and heavy oil from Canadian oil sands. New pipeline capacities could open up supply to the global market soon should current export restrictions for US oil be abolished. The boom for US oil shale gas has cooled markedly on the back of low prices. Only when new sales markets are opened up through LNG exports, should US shale gas production gain momentum again.
Forecast revision: We consider the recent oil price drop to be temporary in nature. The underlying fundamentals have not changed. The economy is set to strength during the course of the year and the oil market will tighten. We therefore made only slight downward adjustments to our price forecasts for Q2 and Q3. We expect the price of Brent crude to rise to $116 per barrel by mid-year. Our year-end forecast remains unchanged at $125 per barrel.
Source: Commerzbank Commodity Research