CHICAGO--(BUSINESS WIRE)--The growth of U.S. shale oil production has and should continue to have a moderating effect on global oil prices, according to a Fitch Ratings report.
U.S. oil production has increased by 3 million barrels per day (mmbd) since its low point of approximately 5 mmbd in 2008. Projections have future production continuing to increase through 2019, perhaps to as much as 9.6 mmbd according to EIA estimates. The increase to date is equal to about 3% of total world consumption, which is enough to have a significant impact on world oil prices by preserving the Organization of the Petroleum Exporting Countries' (OPEC) spare capacity.
Fitch notes that rising U.S. production has offset ongoing supply disruptions in the Middle East, and raised expectations of higher future supply. Combined with other factors, this has contributed to a trend of increasing backwardation in the forward price curve for oil.
While many of the benefits of the U.S. oil and gas fracking revolution accrue only to the U.S., Fitch believes all oil-consuming countries benefit from the stabilizing effect of increased U.S. output on world oil prices. This includes improvements to current account balances and lower inflation.
The full report 'Global Impact of U.S. Shale Oil' is available at 'www.fitchratings.com', or by clicking on the link .
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: Global Impact of U.S. Shale Oil (Rising Production Tempers World Prices)