U.S. energy company share prices plummeted amid OPEC concerns of U.S. shale gas threat to it’s market power.

Exxon Mobil Corp, Chevron Corp, and Schlumberger Ltd lost and West Texas Intermediate Oil all recorded losses in response to OPEC’s oil price cut. Policy uncertainty and global oversupply have also pushed Brent oil down by 27 percent.

Rising U.S. shale gas production, which stood at 7.5 million bpd in 2013, is anticipated to almost double by the end of the decade to 14.2 million. The recent price cut by OPEC reflects an attempt to retain market share and profitability, according to a Citibank report; “the consequences for OPEC…..are growing…the refinery system in the U.S. Gulf of Mexico has been the most attractive market in the world but loss of market share…has become inevitable…[and if this continues]…OPEC‘s pricing power will erode even further” according to a recent Citibank report.

On current trends, U.S. shale gas production will decrease dependency on imports, currently at 2 million bpd, with exports of oil and natural gas liquids reaching 4.7 million bpd.

OPEC and U.S. Compete For Rising Global Energy Demand

A world bulletin feature reveals that global energy demand is set to rise 60% by 2040, with Oil demand sky-rocketing from 90 to 111 million bpd within that time period.

The majority of that demand is estimated to originate in developing economies, making the U.S./OPEC competition for the world’s largest energy consumer more pressing, with prices likely to threaten U.S. shale if they reach below $70 a barrel, (currently at $80 a barrel).

Aside from this challenge, OPEC’s World Oil Outlook report for 2014 points to supply increases in other areas of the world, which are also likely to impact the U.S. global competitive edge; “many regions are expected to register supply increases primarily crude oil from Latin America, mainly Brazil and Columbia, Middle East and Africa, the Caspian, Kazakhstan’s Kashagan oil field should add to robust growth, and Russia” .

The report also indicated that OPEC will continue to dominate the oil industry by 2040

Sources:

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11215412/US-oil-production-surge-to-break-Saudi-Arabias-grip-on-world-energy.html

http://citywire.co.uk/money/overnight-markets-most-us-stocks-fall-as-energy-firms-lump/a781637

http://www.worldbulletin.net/news/147878/opec-energy-demand-to-increase-by-60-pct-by-2040