After a long spell of gains and a barrel price of $ 86 per barrel, there was a sharp decline. Crude oil is now 25% cheaper compared to the beginning of October. Meanwhile, Equinor is investing in the development of new mining infrastructure.
Downward trend for 5 weeks
Today's drop in oil prices was the sharpest in the last 5 weeks. At the beginning of October, the price of a barrel was $ 86. It fell below $ 80 a barrel already at the end of October, and yesterday it cost $ 72. However, today's opening of the markets amazed everyone - now the price is just over $ 65.
How did this happen?
According to analysts from DNB, the sharp fall in prices is speculative. It is related to the tweet of US President Donald Trump, who called on Saudi Arabia and the OPEC countries to maintain the current level of production. This announcement was a response to the announcements made by OPEC about the need to reduce oil production.
This is not the only reason
The fall in oil prices is not only due to what Donald Trump wrote on his Twitter account. The reasons can be seen in the growing reserves of the raw material of the largest miners, as well as in the growing production. The United States alone has raised production to 11,6 million barrels per day, which is the country's historic record. Pressure on the decline in prices is also exerted by growing production in other countries, although OPEC countries have announced restrictions in this regard.
Bad news for Equinor
So violent the decline in prices of this raw material is not good news for Equinor. How we informed on August 28, the company is investing in new mining infrastructure "Johan Svedrup". It is planned to generate NOK 350 million in revenues per day and employ up to 12 people. Mining is expected to be profitable even if the price of a barrel drops to $20. This assumes that the investment will be fully ready for operation. Production is scheduled to start only in 2019.
Mining will cease to be profitable in 2040?
As reported on October 11According to Jørgen Randers - a Norwegian scientist - the profitability of oil production will reach its peak in 2030. He suggests preparing the national economy to stop mining in 2040. The economist from Nordea, Thina Saltvedt, echoes him, while Ingvil Smines Tybring-Gjedde, Secretary of State at the Ministry of Petroleum and Energy, is not concealed by such theses.
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