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The U.S. Oil Industry Sets Its Sights On Asia | Nasdaq.com

Rather than being crippled by OPEC’s attempt to flood the market, North American shale seems to have taken this challenge in stride, and even become stronger, faster and more efficient as a result. Couple this with U.S. crude’s more dynamic pricing system and it isn’t hard to see why WTI futures are overtaking futures like Brent and Dubai.

The gap in production that OPEC is attempting to create is simply being filled by U.S. shale, so it seems that not only did OPEC shoot itself in the foot by forcing the price to $26 per barrel, it is compounding that mistake by allowing the U.S. to flood the market itself.

Saudi Arabia remains unconcerned, and the U.S. lacks the infrastructure to deliver anything near the volume that it does to China, but the very fact that it is shipping any oil at all amply demonstrates the U.S.’s position in the global oil trade.

No longer a slave to the market according to OPEC, the U.S. finds itself in the enviable position of being in control of its own oil supply. When oil prices are high it can ramp up production, thereby both saving money on expensive imports and capitalizing on high exports. Should prices fall again, it can take advantage of low import costs, and scale back production until it reaches a favorable level.

What this means for OPEC is that its power is a mere shadow of what it was in the 1970s. Its influence of the global oil trade is evaporating, and its reliance on oil wealth is something that is looking untenable at best.

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