Recent data suggests America frackers are having a field day drilling for oil at current price levels. The House of Saud is on record saying they would not cut back production in order to placate American drillers gone wild. Essentially, we’re at an impasse here, juxtaposed between overzealous American drillers who have nothing to lose and sovereign governments in the Middle East who solely depend on the price of crude to keep their lights on, figuratively speaking.
“It will be interesting to see how OPEC rhetoric will evolve with this price correction. Is price the only consideration when it comes to the decision of extending cuts?” BNP Paribas global head of commodity strategy Harry Tchilinguirian told the Reuters Global Oil Forum.
Very little has been said about the 3mo lull in crude prices and recent acceleration to the downside. It has not been pretty.
According to Exodus, the median price drop for the oil drillers is in the magnitude of 17% — effectively approaching bear market territory. Today the sector is bouncing — but this is definitely the single most important sector to watch for a variety of reason.
Alongside being a barometer for global economic conditions, the oil sector also comprises a large portion of America’s high yield credit — represented by ETFs $JNK and $HYG. Bear in mind, this is still an industry with hundreds of billions in debt and could pose as a systemic problem at anytime during the credit cycle — should liquidity tighten.
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Just read that US shale wellhead breakeven prices are down circa 50% from start 2013 to end 2016. They have learned to be much more efficient. Crude inventory over the same stretch of time has risen from 340,000 kbbl to like 535,000 kbbl in the US. This is the real deal which will put OPEC in pain. I guess they talked the prices a bit but talk will not suffice.
can you provide the link where you read this,…
many thanks
$45.00 long term crude will be just the ticket to get the Middle East nice and peaceful like. They’ll have to seek all their real estate and Lamborghini’s to rich Americans. Camels will be the transport of choice so… what’s the ticker symbol for one humpers?
And tents…
Sell… not seek.
What are the actual reserves and how long until depleted? Well kept secrets plus moving targets due to technology advancements.