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Why the delay in production cuts? One figure tells you why
Since June last year, international crude oil prices have fallen sharply from their highs, with Brent crude, the benchmark for international crude oil, constantly updating the market's prediction of the bottom of oil prices. Has the golden age of oil passed? Some believe that low oil prices will prolong the "life" of the entire oil industry. It is worth mentioning that compared with the three previous major oil price declines in history, the biggest difference in this round of oil price declines is the development of alternative energy. Chen Weidong said: "The oil price declines in 1986, 1998, and 2009 did not see the emergence of alternative energy, but 2014 did. This time, it is mainly due to the development of energy storage technology, and the future development of this technology will have a profound impact on fossil fuels such as oil." In recent years, driven by technological advances, US shale oil production has been steadily climbing, leading to oversupply. As the largest oil producer and consumer, the US will see further development of shale oil technology as oil prices fall. Chen Weidong believes that: "The US's move to increase shale oil production to lower oil prices is actually to extend the life of oil." Since oil is priced and settled in US dollars in the international market, oil prices and the US dollar are usually negatively correlated. In this round of oil price declines, the strengthening of the US dollar is also a factor that cannot be ignored. Relevant data show that in 2014, due to the continued recovery of the US economy and the slowdown or even stagnation of the European and Japanese economies, the US dollar appreciated significantly against multiple currencies, and the oil price denominated in US dollars fell accordingly. Not only that, but the prices of bulk commodities, including coal, also fell.
Publish time：
2020-10-16
Since June last year, international crude oil prices have fallen sharply from their highs, with the Brent crude oil benchmark continuously revising the market's prediction of the oil price floor. Has the golden age of oil passed?
Some believe that low oil prices will extend the "lifespan" of the entire oil industry.
It is worth mentioning that compared to the three previous major oil price drops in history, the biggest difference in this round of oil price declines is the development of alternative energy. Chen Weidong stated: "The oil price drops in 1986, 1998, and 2009 did not see the emergence of alternative energy, but 2014 did. This time, it is mainly due to the development of energy storage technology, and the future development of this technology will have a profound impact on fossil fuels such as oil."
In recent years, driven by technological advancements, US shale oil production has steadily increased, leading to oversupply. As the largest oil producer and consumer, the US will see further advancements in shale oil technology as a result of the falling oil prices. Chen Weidong believes: "The US's move to increase shale oil production and lower oil prices is actually to extend the life of oil."
Since oil is priced and settled in US dollars in the international market, oil prices and the US dollar typically have an inverse relationship. In this round of oil price declines, the strengthening US dollar is also a factor that cannot be ignored. Relevant data shows that in 2014, due to the continued recovery of the US economy and the slowdown or stagnation of the European and Japanese economies, the US dollar appreciated significantly against multiple currencies, causing oil prices denominated in US dollars to fall. Furthermore, the prices of bulk commodities, including coal, also fell sharply.
Keywords：
Crude oil,Petroleum
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