1) Seems like Russia and KSA want the US to be involved in the cuts. If we don't play ball, the oil price would rise but OPEC+ members would lose share as the US would still be producing at record levels. The oil market surged this week on the news but the dispute it seems is not over between Russia and KSA, and it would not solve the demand destruction that has taken place. 2) Update - It seems after the surge in price on the news of a meeting on supply cuts, there are still many disputes and more calls for oil producers outside of OPEC+ to make cuts to production. The meeting has been rescheduled.
We dont need to play with OPEC. For decades, OPEC had the US over the barrel even as one of their largest customers. Bow that the US is producing at levels that threatens OPEC, they want to bring us into their manipulation of the global energy production. Mainly for their benefit. No thanks.
Wasn't that long ago when people were talking about the end of cheap energy due to "peak oil" I recall one ABC (Aust) show talking about the end of urban life as we know it due to the cost of transport. Talk of $200 and $300 a barrel was common. $20 a barrel West Texas is astonishing in 2020. But you could say 2020 is shaping up to an interesting year in any case.
They will just do what they did last time. They know their production costs are much less than ours so they will allow the price to rise to that point. Once enough US companies go broke under their high debt loads they will ratchet up again.
Didn't Trump say he's going to put tariffs on crude.... if the Russians and Saudi's don't work this out
I don't see the shale industry coming back after the eventual bottom - Capital has left the building. After losing money for a decade - the industry was supposed to show a profit in 2018 - when prices were higher - no such luck. Capital was already heading for the exits. In 2019 it was running for the exits. The bonds/debt of these companies dropping in value like a stone. Now the market cap of most of these has been wiped out - and much of that debt is worthless paper. The only money that will be showing up to fund any "racheting up" would have to come from Gov't. Sure some of the names like Exxon can continue - but shale is a red mark on their balance sheet - and things are not going to improve - much of the best shale areas have already been used up - and even in the best areas - which is only a fraction of the best companies property. The problem with this industry is that it costs big money up front to drill - and so far - 12 years later - with all the improvements made - there is no money to be made. Someone has to fund these up front costs - and those folks are done throwing good money after bad. This time is much much different than last time. The two situations are not comparable.
I still think the only thing between us and oil over $100 is fracking. Looking at the last time fracking kept going down to about $45.
That's simply not the case .. Peak oil never happened and in fact the reverse is true - there is an overabundance of oil. OPEC and Russia have been cutting production to keep prices reasonable - due to Fracking. Canada as well. Regardless - fracking is a huge waste of money. We could buy more oil from Canada - at a huge discount to the Brent Price and way lower than WTI - cheaper than we can produce it. Buying from Canada has roughly the same benefits to our economy as getting it from Fracking - as opposed to getting it from "Nigeria" I know this industry very well - Shale oil is a lose lose proposition.
It has everything to do with the world being awash in oil. Other producers can produce a whole lot of oil - far cheaper than 100 a barrel. The drilling industry has been decimated for many years due to low prices.. This is because no one wants to drill because the price has been too low. The whole industry - not just Fracking - has been hurting because of prices being too low. You are not looking at the big picture. All this does is consolidate the industry into the hands of the Oligopolies. The people getting hurt are the small producers .. the small companies .. these are the folks going bankrupt (along with some mid size companies in Shale) ... and for what ? So we can throw good money after bad ?
I think we are saying the same thing. Fracking needs oil at $50 to make any money at all. But when oil was $120 OPEC cut the price to kill fracking - which they did.
