(19-12-2015, 01:39 PM)weijian Wrote: [ -> ] (16-12-2015, 11:39 AM)lilvestor Wrote: [ -> ]It will still be very economically viable with EOR. My point is that the largest OPEC producers + Russia aren't losing money producing oil at current prices, but we can't say the same thing about the smaller players, or the non-conventional drillers.
Iran's oil production will return to its pre-sanction peak easily (+1m barrels from current levels), they need the money and there is money to be made at $40 USD per barrel, don't forget that the Iranian Rial, like the Russian Ruble, has crashed vs the dollar in recent years.
The big boys might still find oil production economically viable, but I suspect it isn't going to be fiscally viable for some of them. A lot of these folks (eg. Venezuela) are addicted to the good times of 100usd/barrel oil and something bad will happen to a sovereign nation, creating new ripples that possibly morph into black swans. This is similar to the general consensus of VB, ie. It is going to get worst, before it gets better.
The current oil price, is highly influenced by OPEC strategy. It is just a matter of change-of-mind among key players in OPEC, to make a likely turnaround in oil price.
Most market players are anticipating a prolong low oil price, but conditional on OPEC keeping its current strategy.
(19-12-2015, 04:23 PM)CityFarmer Wrote: [ -> ]The current oil price, is highly influenced by OPEC strategy. It is just a matter of change-of-mind among key players in OPEC, to make a likely turnaround in oil price.
Most market players are anticipating a prolong low oil price, but conditional on OPEC keeping its current strategy.
OPEC, reminds me of the EU which had the same monetary policy, but different fiscal policy.
NO surprises they gave up all quotas in the last meeting last week!
Now that Iran is going to contribute increased OPEC production, it is unlikely that Saudis or any other member nations would think of holding back anytime soon whilst Iran is ramping up production which will be occuring over the next 12 months.
Besides, even though rig count has crashed this year from 1500+ to 500+ in the USA, USA oil production is still around 9mil+bpd compared with their usual 5mil+bpd pre 2012.
Hybrid car and electric car use is also starting to become more popular, it may still take a while for them to replace conventional engines, but the trend is pretty evident now. And since much of oil use in transportation, it is not a long stretch to predict that global reliance on oil at some point is either going to remain stable or drop.
so despite the arabs saying they just want market share and making it sound like a business decision, in actual fact, it may be that they are realising that their oil won't be in much demand anymore in the future and the clock is ticking for them to extract and sell as much as they can. If they think that oil will be worth $10 in the near future, what's to stop them from producing as much as possible now and selling as much as possible now. the way I see it, it's almost like a "free for all" buffet lunch, down in OPEC land.
very likely we are just into year one of a commodity supercycle bust that will last a couple years at least if not five
-----Oil $30 baby lai liao!!!-----
The more they continue pumping, the more maintenance services for their oil rig or plants... Upstream oil and gas sector may be in the play in the very near future irregardless of oil price....
(22-12-2015, 12:08 AM)crabcrab Wrote: [ -> ]The more they continue pumping, the more maintenance services for their oil rig or plants... Upstream oil and gas sector may be in the play in the very near future irregardless of oil price....
There'll still be significant efficiency gains to be made among the service providers... So far it's really just retrenchment, closing offices etc. which are the low hanging fruits of cutting costs. Eventually it'll reach the M&A or liquidation stage, that should be when things are really going down.
Oil Bankruptcies Reach Highest Quarterly Level Since Recession
Bankruptcies among oil and gas companies have reached quarterly levels last seen in the Great Recession, according to the Federal Reserve Bank of Dallas.
At least nine U.S. oil and gas companies that accounted for more than $2 billion in debt have filed for bankruptcy in the fourth quarter, the bank
said Wednesday in its energy economic update for the final three months of the year.
"Lower oil prices have taken a significant financial toll on U.S. oil and gas producers, in part because many face higher costs of production than their international counterparts do," according to the note written by Navi Dhaliwal, a research assistant, and Martin Stuermer, a research economist. "If bankruptcies continue at this rate, more may follow in 2016."
Since peaking in October 2014, U.S. oil and gas employment has fallen by 70,000 jobs, the analysts wrote in the report.
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Likely many more to come as the hedging contracts that have been keeping them afloat starts to end. IIRC a lot are expiring this quarter.
Trigger for market downturn as billions in listed O&G companies get wiped out?