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Oil Continues Way Down — No Stop by OPEC

January 12, 2015 at 18:09 by Andriy Moraru

Oil seems to be the main driver of the industrial commodities in the market recently. It continues to lose and is serving as a good indicator for such assets as copper, natural gas and aluminum. Today’s fall is the 6th daily trading session this year to set the new lowest low since 2009.

It looks like the OPEC will not be cutting its output in response to the fall of prices. With OPEC out of the bearish rally’s way, there are only two things that can stop it are global economic growth outburst and the curb in US shale oil production. The latter looks to be the only probable one of the two.

Experts believe that the current downtrend may continue at least to $40 per barrel when the most of the shale oil production in Texas and North Dakota becomes unprofitable. Some companies that were pumping shale oil are already experiencing financial troubles. It may take several months for the price to reflect those changes.

WTI grade of crude fell from $47.52 to $46.50 per barrel on ICE as of 18:05 GMT today, reaching the intraday low of $45.90 per barrel. It is worth mentioning that the current long-term drop of oil price is still much shallower than the one spurred by the financial crisis of 2008.

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