redrobin said:How low will it go?
Saudi Arabia needs Brent oil prices to exceed $91 a barrel to pay its bills, according to IMF estimates. That’s interesting, because Saudi Arabia actually has the ability to drive the price higher but has so far declined to do so. The biggest OPEC producer, with almost $800 billion in cash reserves to lean on, is opting instead to maintain market share and to test the break-even points of U.S. shale oil.
It’s a tough test, and OPEC may not like the results. The break-even for American oil has been falling as fracking techniques are refined. The U.S. is producing unconventional oil with acceptable returns in the range of $70 a barrel for oil, less than most OPEC nations can sustain.
. We are seeing downgrades of energy companies. Layoffs and lack of investment and the promise of what might have been are now turning into economic pain. Just consider ground zero of the fracking revolution and you can see how this drop in oil can see fortunes quickly change. Jennifer Brooks, of the Star Tribune, wrote an article warning of tough times ahead for the North Dakota energy boom. She says that while the North Dakota oil boom isn’t going bust just yet, the state is bracing for bad economic news that could ripple far beyond its borders. She quotes Ron Ness, president of the North Dakota Petroleum Council, as saying “I think we’re going to see a fairly significant correction, you’re going to see a tremendous number of pink slips over the next quarter and into the following quarter. And if we’re having this discussion in June, it will be that much more severe.”
Mike said:Bakken breakeven = approx. $73.00
What's hurting even more is the transportation costs by rail.
I read somewhere that it costs about $8.00 more per barrel than it would by pipeline.
May not be long before Williston is a ghost town. Banks won't make loans in this atmosphere.
kolanuraven said:Mike said:Bakken breakeven = approx. $73.00
What's hurting even more is the transportation costs by rail.
I read somewhere that it costs about $8.00 more per barrel than it would by pipeline.
May not be long before Williston is a ghost town. Banks won't make loans in this atmosphere.
Quiet of few from here who left out to work in the Bakken have returned home due to lay off or just out right job termination. They say by Spring, lots of layoffs will happen
Mike said:Exactly the Saudi's intentions.
hypocritexposer said:Mike said:Exactly the Saudi's intentions.
Mike, it's not the Saudis, or OPEC, that has upped production. Their volume has remained the same for years.
It is increased US production and a slowed global economy that is lowering the price.
Mike said:hypocritexposer said:Mike said:Exactly the Saudi's intentions.
Mike, it's not the Saudis, or OPEC, that has upped production. Their volume has remained the same for years.
It is increased US production and a slowed global economy that is lowering the price.
I know that. But the Saudi's refusing to cut shipping is helping to maintain low prices. They know their production costs are lower than ours.