Understanding the dynamics of oil futures trading

Key points:

• The US set a record for oil production in December, the highest ever recorded by any country.
• Shale production continues to defy ‘peak oil’ predictions.
• Geopolitical tensions in the Middle East could push oil prices higher.
• Also: Investors are picking up shares of these 2 dividend legends

If you trade oil futures, it’s important to consider that the US produced more oil in December than any other country has produced in a single month, largely due to continued shale oil productivity. Despite concerns about weak Chinese demand, the idea of ​​peak oil has faded. While oil prices have fallen from $90 earlier this year to around $67-68, they could rise again, especially if geopolitical tensions in the Middle East escalate. Big oil companies can still profit at current prices, although their margins are thinner compared to when oil was at $90 or more.

Record US oil production

• The United States set a record in December by producing more oil than any country in any month in history, thanks in large part to the shale industry.

Resilience of shale oil

• Shale oil continues to be a strong contributor to US oil production, dispelling earlier concerns about “peak oil” forecasts.

The impact of the Chinese economy on oil demand

• There is ongoing concern about the weak Chinese economy and its effect on global oil demand, which influences oil prices.

The Decline of Peak Oil Theories

• The idea that the world will reach “peak oil” this decade has been proven wrong, the demand for oil and oil products continues to grow.

Potential for higher oil prices

• Oil prices could rise significantly, especially if geopolitical tensions in the Middle East continue to escalate.

Oil price volatility and geopolitical influence

• Historical context shows how geopolitical events, such as the situation in Ukraine, can cause temporary spikes in oil prices, although these spikes don’t always last.

The economics of oil production

• Major oil companies continue to benefit from lower oil prices, with production costs between $40 and $45 per barrel. However, they see much bigger profits when prices rise to $90 or $100.

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