Arab Today, arab today opec move puts us shale in tight spot
Last Updated : GMT 20:08:17
Arab Today, arab today
Arab Today, arab today

OPEC move puts US shale in tight spot

Arab Today, arab today

Arab Today, arab today OPEC move puts US shale in tight spot

The 166th ordinary meeting of OPEC
New York - AFP

In taking no action on production Thursday, OPEC did the opposite of what it usually does. It effectively rubber-stamped a supply glut that already has sent prices plunging.
But to many analysts, the cartel's seeming enthusiasm for lower crude oil prices was not really all that surprising. Rather, the tactic made sense in light of an American shale boom that has put OPEC on the defensive.
"OPEC is all in and will continue to flood the globe with oil in an effort to bury the US shale oil producer," said Phil Flynn, senior market analyst at the Price Futures Group.
"It is an all-out production war and it is game on, all the barrels are on the table and for OPEC it is life or death."
US oil prices tumbled more than $7 Friday, sinking to $66.15 a barrel, the lowest level since September 2009, following an OPEC meeting that one research firm called a "watershed" moment.
Equity investors also pummeled the sector, hitting giants like ExxonMobil (-4.5 percent) and Chevron (-5.5 percent). Also falling were oil services companies like Halliburton (-10.9 percent) and Nabors Industries (-12.9 percent), as well as shale producers Continental Resources (-19.9 percent) and EOG Resources (-7.8 percent).
Despite the carnage, US oil industry officials brushed off suggestions the American shale boom will die.
"It's certainly a test, but it's certainly not an exit," said Fred Lawrence, a vice president at the Independent Petroleum Association of America.
"US oil producers can handle more pain than OPEC imagines."
-A new paradigm?-The OPEC move comes amid a multi-year US energy boom that has transformed America's energy picture and the global petroleum market as a whole.
The United States has lifted daily oil production by more than 40 percent since 2006, igniting a debate about allowing US oil exports and rendering the US a worthy competitor to petroleum kingpins Saudi Arabia and Russia as the world's biggest petroleum producer.
In the oil market, the increased supplies from the US has offset the effects of political strife in leading oil-producing countries and pressured prices at a time when global economic growth is slowing.
Faced with a roughly 35 percent drop in oil prices since June, the Organisation of the Petroleum Exporting Countries Thursday could have cut its 30 million barrels per day production ceiling or at least promised to stop overproducing.
Instead, the cartel effectively stood pat as powerful members like Saudi Oil Minister Ali al-Naimi talked of how he expected the oil market to "stabilize itself eventually."
The manuever appeared to be another example of a producer orchestrating "good sweating," a tactic employed since the days of Rockefeller in the late 19th century to flood the market to pressure less-efficient competitors.
Thursday's OPEC decision was "a watershed for the oil market," Barclays analysts said in a research note that predicted oil inventories would continue to swell through the fourth quarter and into 2015, owing to a 1.49 million barrels per day increase in non-OPEC supply next year.
"OPEC is clearly signaling that it will no longer bear the burden of market adjustment alone and this decision puts the onus on other producers, especially US tight oil to adjust as well."
Barclays headlined the note, "Over to you, America."A note from Morgan Stanley similarly warned the oil market could be entering a "new paradigm" and predicted the move would immediately curtail US and global energy investment.
Lawrence of IPAA agreed that US producers would cut back in light of the changed outlook. He predicted the US rig count for oil projects could fall about 200-300 from 1,572 in the coming weeks.
"A lot of companies are going to be adjusting their capex (capital expenditures) programs over the next two weeks," he said.
Lawrence said some higher-cost drilling will likely be curtailed in key shale regions like the Bakken in North Dakota and the Tuscaloosa Trend in Louisiana.
But in other cases, such as the Permian Basin, many leading independents have stronger finances than is widely thought. Also, many US companies rely on revenues from production of natural gas, whose prices are not directly influenced by OPEC's action. And companies are bringing down production costs with improved technology, Lawrence said.
Lawrence said OPEC's move would affect less-efficient US companies, but would not derail the industry as a whole.
"It'll be a challenge that'll make our producers stronger," he said.

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today opec move puts us shale in tight spot Arab Today, arab today opec move puts us shale in tight spot

 



Arab Today, arab today
Arab Today, arab today Jordan airline suggests flyers 'talk'

GMT 11:59 2017 Friday ,24 March

Jordan airline suggests flyers 'talk'
Arab Today, arab today Sheds light on major steps in 12-year career

GMT 06:07 2017 Monday ,27 February

Sheds light on major steps in 12-year career
Arab Today, arab today Dozens dead in US-led Syria strikes

GMT 08:35 2017 Thursday ,23 March

Dozens dead in US-led Syria strikes
View News in Arabic - Business: اقتصاد دولي
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Yemen children dream of school

GMT 07:25 2017 Friday ,24 March

Yemen children dream of school
Arab Today, arab today MP submits a petition to dismiss university head

GMT 06:21 2017 Friday ,24 March

MP submits a petition to dismiss university head
Arab Today, arab today Salvage of South Korea's Sewol ferry

GMT 04:51 2017 Friday ,24 March

Salvage of South Korea's Sewol ferry
Arab Today, arab today Prepares to give stargazers an eyeful

GMT 13:38 2017 Monday ,06 March

Prepares to give stargazers an eyeful
Arab Today, arab today Audi RS 5 Coupe acquires new design

GMT 13:22 2017 Thursday ,23 March

Audi RS 5 Coupe acquires new design
Arab Today, arab today Renault Trezor wins design award

GMT 11:56 2017 Tuesday ,21 March

Renault Trezor wins design award
Arab Today, arab today Merna Waleed praises her work with Soad Hosni

GMT 07:03 2017 Wednesday ,22 March

Merna Waleed praises her work with Soad Hosni
Arab Today, arab today 2017 already marked

GMT 15:25 2017 Tuesday ,21 March

2017 already marked

GMT 07:12 2017 Tuesday ,21 March

Donia Abdel Aziz participates in "Game of Silence"

GMT 22:00 2017 Thursday ,23 March

Number of unwedded girls amounts to 2.5m

GMT 10:34 2017 Tuesday ,21 March

Mexico threatens to ditch US corn imports

GMT 19:45 2017 Monday ,20 February

Sarah Belamesh designs antiques of "ceramic"

GMT 07:03 2017 Thursday ,23 March

Spider Venom May Offer Hope to Stroke Victims

GMT 07:36 2017 Wednesday ,22 March

US, Britain ban laptops on flights

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday