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 demandled to synthetic oil production, known as non-traditional oil production methods (Grushevenko, E., Grushevenko, D., 2012a). Unconventional oil is a synthetic energy product designed to convert one fuel source (fuel oil, shale, sandresin) 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 break even 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 cost-effectiveness 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.