US shale industry expected to shrink sharply as oil price falls

Disir

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The US shale industry is expected to shrink by more than 2m barrels a day following a collapse in global oil prices which has forced oil producers to shut down their fracking rigs.

The US oil market slumped to fresh 18-year lows and below $18 a barrel on Friday following one of the biggest hikes in US oil stocks on record as demand for oil continues to fall and storage facilities near their limits. The international benchmark oil price fell to $28 a barrel.

“The market knows that the US crude stocks will fill very rapidly,” said Bjørnar Tonhaugen, the head of oil markets at Rystad Energy. Tonhaugen said US crude oil stocks might reach an all time high by the end of the month and continue to build in May.

It's only going to shrink for a short time.
 

fncceo

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This is the reality of oil markets and why Saudis are in such a good position.

Saudis (thanks to American and British building the infrastructure) can pull oil out of the ground cheaper than anyone else ... including the Russians.

As prices fall because of Saudi overproduction, everyone else's oil becomes less profitable.

However, the Saudi have huge commitments to maintaining the social infrastructure in a country where almost no citizen actually works. The Saudis introduced a basic income for their citizens decades ago to keep the masses from slaughtering the ultra-rich royal family.

Ultimately, the Saudis will be forced to reduce production to raise prices. When that happens, the existing US shale oil industry will be ready to exploit the gap.
 

Polishprince

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The US shale industry is expected to shrink by more than 2m barrels a day following a collapse in global oil prices which has forced oil producers to shut down their fracking rigs.

The US oil market slumped to fresh 18-year lows and below $18 a barrel on Friday following one of the biggest hikes in US oil stocks on record as demand for oil continues to fall and storage facilities near their limits. The international benchmark oil price fell to $28 a barrel.

“The market knows that the US crude stocks will fill very rapidly,” said Bjørnar Tonhaugen, the head of oil markets at Rystad Energy. Tonhaugen said US crude oil stocks might reach an all time high by the end of the month and continue to build in May.

It's only going to shrink for a short time.

Now is a tremendous time for America to rebuild its Strategic Petroleum Reserves, while the prices are low.
 

Maxdeath

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the oil industry has been that way for many years. When some country overproduced the price of oil fell. When there was a shortage of free oil the prices rose. Fncceo is correct the Saudis and others can produce oil much cheaper then any others. It is easy for them to overproduce, which drops the price. Eventually they will have to lower production. Basically they only have two things to sell to the world. Oil and sand, no one wants the sand.
 

MarathonMike

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This is the reality of oil markets and why Saudis are in such a good position.

Saudis (thanks to American and British building the infrastructure) can pull oil out of the ground cheaper than anyone else ... including the Russians.

As prices fall because of Saudi overproduction, everyone else's oil becomes less profitable.

However, the Saudi have huge commitments to maintaining the social infrastructure in a country where almost no citizen actually works. The Saudis introduced a basic income for their citizens decades ago to keep the masses from slaughtering the ultra-rich royal family.

Ultimately, the Saudis will be forced to reduce production to raise prices. When that happens, the existing US shale oil industry will be ready to exploit the gap.
Yes they can still make a profit even at $15 a barrel no one else in the world can do that.
 

Dekster

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The US shale industry is expected to shrink by more than 2m barrels a day following a collapse in global oil prices which has forced oil producers to shut down their fracking rigs.

The US oil market slumped to fresh 18-year lows and below $18 a barrel on Friday following one of the biggest hikes in US oil stocks on record as demand for oil continues to fall and storage facilities near their limits. The international benchmark oil price fell to $28 a barrel.

“The market knows that the US crude stocks will fill very rapidly,” said Bjørnar Tonhaugen, the head of oil markets at Rystad Energy. Tonhaugen said US crude oil stocks might reach an all time high by the end of the month and continue to build in May.

It's only going to shrink for a short time.

Now is a tremendous time for America to rebuild its Strategic Petroleum Reserves, while the prices are low.
Which Trump said he would do but we are already around 90% capacity so it isn't like there is that much more storage space just wanting for some black gold.
 

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