Can Brent fall below $100?

Aug 20 2014, 03:47 IST
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SummaryGiven the levels of geo-political tensions, including armed conflict in Libya, Iraq and Ukraine, few would expect crude oil to fall to 14-month lows.

Given the levels of geo-political tensions, including armed conflict in Libya, Iraq and Ukraine, few would expect crude oil to fall to 14-month lows, as it did Tuesday when Brent traded at a little over $101 a barrel. Part of the reason is that the International Energy Agency has cut its demand forecasts for 2014 and 2015.

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The more important reason is that, apart from Saudi Arabia ramping up production to its highest level in nearly a year, North Americaís shale oil/gas has more than made up for the slack in oil production in other parts of the world. Production cuts to maintain prices, as in the past, are a possibility, but rising US and Canadian production limits the effectiveness of that measure. Thatís good news for India.

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