The toll from low oil prices is also spreading to banks that have exposure to the energy sector, as roughly a third of US shale oil producers are at high risk of slipping into bankruptcy this year, according to a study by Deloitte. Brent crude, which is used to price oils internationally, fell 82 cents to $33.15 a barrel in London. S. shale oil production is easier said than done.
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In his comments, the petroleum minister said that though demand for oil remains strong, his country has every intention of letting the market rebalance by squeezing out those producers that need higher oil prices in order to be profitable.
On Tuesday, oil prices dived over 4 percent following the previous day’s solid gains.
At around 0415 GMT, the USA benchmark West Texas Intermediate (WTI) for delivery in April fell 24 cents, or 0.75 percent, to $31.91.
LACKING CONFIDENCE: A report from the Conference Board showed US consumer confidence fell to 92.2 in February, down sharply from a reading of 97.8 in January and the lowest level since July.
“The basic overriding position in the oil market at the moment is that the global production exceeds global demand by quite a wide margin”, said Ric Spooner, chief market analyst, CMC Markets.
“It sounds harsh, and unfortunately it is, but it is the more efficient way to rebalance markets”. Per well cost savings in the 25-30% range are widely reported in quarterly corporate filings. Access to sustainable financing will remain important as ever. It is planning to ramp up its oil output following the end of Western sanctions and has said the output freeze proposal is “laughable”. That will make for another 200,000 barrel-a-day reduction in output in 2017, IEA estimates.
Prices fell further into a slump earlier Thursday after private energy data forecasting company Genscape Inc. said inventories at the key USA storage hub in Cushing, Okla., rose to more than 67 million barrels as of earlier this week, nearing the maximum estimated capacity of the region of 73 million barrels.
The falls were a result of an apparent lack in cooperation among members of the Organization of the Petroleum Exporting Countries (OPEC) to freeze or cut production to rein in ballooning oversupply that has pulled down prices by 70 percent since mid-2014.
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In other words, there will be a sequel, but it might not be quite as exciting as the original.
