Wall Street Journal: American “oil” cornered

The heads of the major oil companies are preparing for the “worst case scenario” and expect a protracted fall in prices, writes The Wall Street Journal. With a price of $ 40-45 per barrel “will hurt” all the companies from the United States.

MOSCOW, November 21 - RIA Novosti. Resources, to an oil boom in the United States - cheap money and ingenuity energy companies - are drying at a price of $ 40 per barrel, the newspaper The Wall Street Journal.

US companies have an advantage over its competitors, while maintaining and increasing the high rate of oil production (including shale deposits of hydrocarbons), in spite of the deep decline in prices from their levels - from $ 100 per barrel in 2014 to the current $ 40. Such price level cornering even the most efficient companies, the newspaper notes.
“The prices of $ 40-45 per barrel do not bode well for this business”, - the newspaper quoted the CEO of the largest independent US oil company ConocoPhillips Ryan Lance.

In the past six weeks, the head of the major oil companies from the United States were discussing with investors the worst-case scenario - the market outlook in the price level of $ 50 per barrel. Given that the major oil exporters continue to maintain a record production rates, this forecast may be optimistic, says The Wall Street Journal.

Many senior executives, including the CEO BP Robert Dudley, expect “prolonged drop” of oil prices. Make your prediction, and the US Department of Energy - in the next year there is expected a slight price fluctuations around the level of $ 50 per barrel.

With an increase in the efficiency of American companies, achieved through lower production costs and access to a vast capital market, grow and investors’ expectations. When oil was trading at around $ 65 per barrel, many heads of energy companies say they can make a profit and at $ 60, and the representatives of the drilling company EOG Resources assured that the return on investment in some wells can exceed 40%, even at the price of $ 50 per barrel, the article says.

Continued commentary

21 November 2015

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