Economic Bulletin , News of 20 December 2017

Crude Oil: market trends and simulations point toward stable equilibrium

Franziska Holz (Copyright)  gaspipeline Energy Olbernhau
Copyright: Franziska Holz

In this study, we report on the current state of the international market for crude oil. The market data we analyzed indicate that competition has intensified as a result of the now firmly-established shale oil extraction industry in the U.S. Model-based simulations also show that supply-side shifts should only have moderate price effects. This applies to both an expansion in U.S. shale oil production and a disruption of production in OPEC countries. Market data and simulations indicate that the crude oil market is currently in a new equilibrium that appears to be relatively robust in the short term. In the absence of further shocks, we can continue to expect a moderate price level for crude oil in the short term with corresponding implications for economic and climate policy. [...]

DIW Economic Bulletin 51-52/2017 | PDF, 153 KB