Q:

What factors influence Bakken crude oil prices?

A:

Quick Answer

There are many factors that influence the price of Bakken oil. Number of wells excavated, wells in actual production mode, production rates and the vagaries of the international oil market all contribute to setting the price of crude oil.

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Full Answer

One of the concerns that will affect the price of Bakken oil in the foreseeable future is that production is believed to be peaking according to oilprice.com. This means the number of barrels is expected to start decreasing as soon as early 2016.

A researcher quoted by CNBC estimates that, while only a quarter of Bakken oil has been extracted, the remaining locations will require an increased investment because of their poor infrastructure which, in turn, will also diminish profits.

Data concerning the initial production rate, which measures the oil extracted in the first 24 hours after a well becomes operational has also shown signs of decreasing. This rate is commonly used to project future yields and in the case of Bakken, numbers have not been optimistic.

There have also been reports that, while wells are still being excavated, the fracking is being put on hold since investors are wary of flooding the market at a time when oil prices have been consistently going down, reports CNBC. Additionally, Bakken is dependent on the prices of both Brent oil, the benchmark for international oil purchases and West Texas Intermediate, the crude oil grade closest in chemical characteristics with its own production.

Others factors are an increase in worldwide oil production, Saudi Arabia’s refusal to cut off production and a slight, yet continued, decrease in oil demand.

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