The Review of Unconventional Oil Price Fluctuations and Forecasting

Abstract

Relevance of the research. Due to the effect of globalization and integration processes, it is impossible to imagine a world without oil, as the oil price changes affect not only the financial markets but also international trade circulation (Babatunde et al., 2013; Bastiani et al., 2016.; Caporale, et al., 2016.; Humphrey et al., 2016). Oil demand is growing rapidly. It is necessary for mineral-based fuels, lubricants, plastics and various products of the chemical industry and other uses. High consumer demand led to synthetic oil production, known as non-traditional oil production methods (Grushevenko, E., Grushevenko, D., 2012 a). Unconventional oil is a synthetic energy product designed to convert one fuel source (fuel oil, shale, sand resin) to another, but it requires a tremendous amount of heat and fresh water, however, synthetic oil is much cheaper to extract than conventional oil from deep sources in the context of limited resources. Further increasing investor interest in oil production from unconventional reserves (oil, shale, sand) for a much lower production costs and cost dynamics and higher return on investment projects in return has been reported occasionally. Since the period of 2006–2011 breakeven price of oil, extracted from the shale has changed, the cost has doubled – from 105 US dollars/barrel to 48 US dollars/barrel. During the same period, the costeffectiveness of oil extracted from tar sand deposits price increased by 20% and accounted for around 73 US dollars/barrel. Based on the present state of international trade realities and trends it can be suggested that fluctuations in oil prices is becoming a major factor in rising geopolitical tensions and fears of financial market turmoil. The research problem is posed by the question of what are the impacts of unconventional oil prices and demand in the global oil market. Research subject: unconventional oil market and methods. Research purpose was to analyse and define unconventional oil prices on the world market. The following objectives were formulated to achieve the purpose: 1. Formulate the methodological research concept of oil prices and demand. 2. Overview of unconventional oil price assessments. Research methods. The article is prepared applying the methods of systemic analysis of academic literature, logical analysis and synthesis of theoretical research carried out. Unconventional oil price changes and methods were reviewed according to the basis of the last decade foreign studies published in EBSCO Host Emerald and Science Direct databases. Outcomes and conclusions. A detailed global economic and energy trends analysis model and ERI RAS program, investigating oil demand over the long term, is the most useful research not only in the Russian energy concern examination of the situation, but also in the global oil market forecasts. In order to more accurately predict the oil prices in the future, creating a probabilistic model, it is necessary to monitor not only the monthly changes, and various events and draw attention to the weekly and monthly events and their changes, because studies suggest that it is extremely important to the future price prediction. The establishment of the correct price of oil patterns needs to be based on long-term data, as this makes it much easier to provide for increases in prices and at the same time to avoid them. Unconventional oil production potential should unfold in the future perspective. Since the development of unconventional oil major impact on global trade flows, and declining US import demand and subsequent stagnation of operating the oil demand for energy-efficient technology late entry, should increase competition among suppliers in the Asia-Pacific oil market. Such a concentration in one of the oil market in the region may lead to significant differences between the different regions of the world oil price fluctuations, but there is an even greater risk of oil producers and consumers. Review of the literature showed that there prevails statistically significant correlation between oil price shocks and fluctuations in the stock market and the inverse relationship prevails in the Gulf countries. Gulf Cooperation Council countries, the stock market indices are closely correlated and have a common tendency to gradually increase or decrease in different periods.

Keywords: unconventional oil, price fluctuation, oil world market.