Opposing Forces Could Keep Petroleum Markets Stable for Some Time to Come

Last year was certainly an exciting one for energy investors, and many are hoping for a calmer, smoother ride to come. While tumultuous times on the world’s energy markets can pay off for those who can stomach them, many investors prefer more in the way of predictability. The crash last year in the price of crude to under twenty dollars was enough to give many pause, and the subsequent near tripling of that mark did not comfort many. While investors who crave excitement and drama certainly got their fill last year, many others are enjoying the slower, stabler environment that has prevailed since.

This is not to say that a consistent price point will necessarily prevail very far into the future, however. As additional info here suggests, a number of factors seem to be conspiring to once again set pricing volatility into motion, although few expect the developments to follow to be nearly as dramatic as those of last year.

One of these is the fact that Saudi Arabia, the world’s most voluminous producer of crude, seems to be satisfied with the discipline it has imposed on North American rivals. Where the kingdom was formerly worried about how higher prices were encouraging more intensive extraction efforts in the United States and Canada, it has since judged the damage done by its heightened production to be largely sufficient.

By forcing prices down with the help of other OPEC members, Saudi Arabia put many North American extraction projects on the sidelines where they will remain for some time. That might just give the giant and its partners some room to once again restrict supply with an aim to moving prices to a higher level.

At the same time, analysts have suggested that the proliferation of natural gas extraction projects could exert even more of a dampening effect. While natural gas is not exactly fungible, in general, with petroleum, it substitutes in a broad-enough range of use cases that a healthier supply makes a dent in demand for the latter. As a result, a renewed appreciation for the environmental advantages of natural gas and other benefits might work against even a determined effort on the part of OPEC to drive petroleum prices much higher.