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Oil Price: How Low Can It Go?

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24 October 2014

Oil Price: How Low Can It Go?

Report summary

Oil price volatility returned with a vengeance in October. A combination of factors triggered a decline in oil prices of about $15 per barrel to $85 per barrel for Brent. If the market nerves are warranted, and oil demand growth slumps significantly in 2015, oil prices could fall further. In this insight, we explore the price decline and how low prices could go through US tight oil and probable development break even price analysis.

Table of contents

    • Fading oil demand growth in 2014 highlights the risk for oil prices
    • Global supply outages have recently offset growth in US tight oil What lies ahead?
    • US role as driver of non-OPEC production growth explains the significance of tight oil breakeven prices
    • Most US tight oil plays are economic with WTI above $70 per barrel
      • Chart 4 - US tight oil new development volumes by breakeven (SWTI)
    • New developments around the world help provide a floor for prices over the medium to long term
  • Conclusion

Tables and charts

This report includes 5 images and tables including:

  • Chart 1 - Change in oil supply/demand forecast for 2014
  • Chart 2 - US tight oil growth keeping pace with rise in losses
  • Chart 3 - Non-OPEC oil/NGL supply growth by key country
  • Chart 5 - Conventional new development volumes by breakeven ($Brent, not $WTI as in the US tight oil illustration)
  • Oil Price: How Low Can It Go?: Image 4

What's included

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    Oil Price: How Low Can It Go?

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