Sad only, that Mike Ruppert didn't live long enough to see these headlines.
'Pass the popcorn'
Half of U.S. Fracking Industry Could Go Bankrupt as Oil Prices Continue to Fall
18
January, 2016
So
the slide continues with no end in sight. As expected this morning,
the oil price has fallen below $28 a barrel on the back of the
historic news over the weekend of sanctions being lifted on Iran.
This
is the lowest level for oil since 2003.
The
markets are spooked that the lifting of sanctions means the imminent
introduction of half a million or so more barrels of oil per day from
Iran into an already oversupplied market. The country has the world’s
fourth largest reserves of oil.
Speaking
earlier today at the Asia Financial Forum in Hong Kong, Stuart
Gulliver, CEO of HSBC said “Major producers are currently
delivering 2-2.5 million barrels per day more than demand, so the
question is how long they can continue to overproduce for at that
level.”
Already
struggling with oversupply from various countries, the market now has
Iran to contend with too.
After
years of isolation due to sanctions, Iran reportedly has a
significant amount of oil to place on the international market
immediately. Analysts from Barclays said
simply: “Iranian exports come at a very bad time.”
That
can only mean one thing: a market awash with oil, which will only add
a downwards pressure on the already low oil price.
The
numbers are becoming brutal reading for the industry: The oil price
has collapsed more than 70 percent since mid-2014.
And
there is no respite in store. In his speech, HSBC
chief executive,
Stuart Gulliver, said he predicted the price of oil to be somewhere
between $25 and $40 in a year’s time.
The
American shale
industry needs
oil at about the 60
to 70 dollar a
barrel level in order to survive.
Having
limped along last year hoping for a rebound in prices this year, the
industry is heading for deep trouble.
Last
week, one analyst predicted that half of U.S. shale oil producers
could go bankrupt before the oil price rebalances itself.
Fadel
Gheit, a senior oil and gas analyst at Oppenheimer & Co believes
it could be two years before oil stabilizes near $60, which is still
below the break-even point for many shale producers.
“Half
of the current producers have no legitimate right to be in a business
where the price forecast even in a recovery is going to be between,
say, $50, $60. They
need $70 oil
to survive,” he told CNBC.
Even
the big boys are taking a hit.
Last
week, BHP
Billiton was
forced to writedown the value of its U.S. oil and gas assets by
$US7.2 billion (Aus$10.4bn), admitting it needed $US60 a barrel oil
to be “cashflow positive.”
But
the reality is that under $30 dollar a barrel, it is only a matter of
time before we see a range of bankruptcies in the shale industry.
“At
this price range, nothing is safe,” says Jesse
Thompson,
an economist at the Federal Reserve Bank of Dallas. And he could well
be proved right.
No comments:
Post a Comment
Note: only a member of this blog may post a comment.