Oil Supply Cushions Market From Global Tensions

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Aug. 14 (Bloomberg) -- Bloomberg's Isaac Arnsdorf and Scarlet Fu examine how the price pf oil has responded to multiple geopolitical crises. They speak in "On The Markets" on Bloomberg Television's "In The Loop.”

Also lower.

Isaac, we have got so many geopolitical issues to sort through.

Iraq, the middle east, of course russia and ukraine.

None of that seems to really have much of an impact on crude oil.

Why is that?

It is important to remember that we did have a bump and oil back in june.

Even then, we're looking at $1.07 in the u.s. the difference is in the past several years, we have had this huge surge in reduction here in the u.s.. that is about 3 million barrels a day.

Shale fracking.

Exactly.

That is about 3 million barrels.

What about the demand picture?

The u.s. is doing well.

China is not the global sponge that it used to be.

The tia, the international agency has been cutting its forecast for global oil demand growth, so you have got this extra capacity on the supply-side.

You have got less than spectacular on the demand side.

You have got a stable, muted market.

On top of that, i cannot help but think it has been a quiet summer in terms of the weather.

There have been no significant hurricanes that i can recall, and that tends to be in it around this time of year.

It could come a little later.

So let's not get too ahead of ourselves.

Exactly.

Gotcha.

When do people say there will be a noticeable increase in demand?

Demand is tricky.

I have not heard too much excitation on demand.

You do hear more people talking about well, what is going on with supply because it is the u.s. going to be able to sustain this pace of growth, is the production going to last off-line going to start a comeback as these tensions ease?

Then you can start to see prices go down.

On the other hand, u.s. production peters out, you can see prices go up.

What about opec?

Are they pretty happy with the way things stand?

Opec countries, saudi arabia needs about $90 per barrel to balance their budget.

Opec doesn't have as much market power as it used to.

The world needs it less than it used to because u.s. and canada has a lot more.

All right, keeping and i out for us on why the world is awash in oil.

Thank you so much.

This text has been automatically generated. It may not be 100% accurate.

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