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The New Normal: Low But Stable Oil Prices

© AFP 2023 / MARK RALSTONOil pumps in operation at an oilfield near central Los Angeles
Oil pumps in operation at an oilfield near central Los Angeles - Sputnik International
Cheap oil is just something that the world will have to get used to, Augustin Eden, a research analyst at online trading provider Accendo Markets, told Sputnik.

Talk of a slump in growth in China is exaggerated, and low oil prices are the new normal that the world economy must get used to, Augustin Eden, a research analyst at UK-based online trading provider Accendo Markets told Radio Sputnik.

​"I think we're due to see oil lower for longer because now we've got shale, and that's the main reason why crude prices have come down so much and that's why they're going to stay down."

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Eden said that if Saudi Arabia continues its dominance of OPEC, then the struggle between the cartel and US shale producers for market share will continue, and continue to keep the oil price low. 

"This is all about a fight against shale and whenever oil goes up, if oil goes back up into the 50s, you'll have US shale producers switching on their rigs again and Saudi Arabia will come out and dump a whole load more oil onto the market to shore up its market share."

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One way of change would be if the so-called 'fragile five' producers within OPEC limit their production in spite of Riyadh, which could potentially support the price, said Eden.

"We're entering a new normal, I think. Again, stability is what people are looking for, they're not necessarily looking for a return to those high levels, they're just looking for a stabilized price that isn't falling long-term, that's that puts the pressure on inflation expectations."

"That should come about naturally, systems find their natural levels and we shouldn't try and fight that. The longer people try to artificially shore up markets in that way, the longer it's going to take to reach that normal that everyone is looking for."   

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