{"id":6374,"date":"2015-12-15T21:44:55","date_gmt":"2015-12-15T21:44:55","guid":{"rendered":"http:\/\/newscoverage.org\/?p=6374"},"modified":"2015-12-15T21:59:27","modified_gmt":"2015-12-15T21:59:27","slug":"shale-oil-producers-defy-shakeout","status":"publish","type":"post","link":"https:\/\/newscoverage.org\/index.php\/2015\/12\/15\/shale-oil-producers-defy-shakeout\/","title":{"rendered":"Shale oil producers defy shakeout"},"content":{"rendered":"<p><strong>By Robert Frank<\/strong><\/p>\n<p>Plummeting oil prices have put unprecedented pressure on energy producers in Canada and around the world. The shale oil revolution has hammered energy prices, driving producer margins below the cost of capital. Clearly, something has to give.<\/p>\n<p>So far, American shale producers have defied a shakeout that had, early this year, seemed inevitable.<\/p>\n<p>\u201cKey OPEC producers expected a recovery and increased production,\u201d recalled RBC Capital Markets managing director and chief commodities strategist Helima Croft. \u201cSaudi production is up almost a million barrels, year over year, as is Iraqi production.\u201d<\/p>\n<p>\u201cThe Saudis tried letting the market set the floor\u2014when they thought the floor was $75 a barrel,\u201d she continued. \u201cThey were surprised by the resilience of U.S. production. If U.S. production ultimately proves unbreakable, then they really have a problem.\u201d<\/p>\n<p>Iran could also add to the oil glut in 2016, if it moves swiftly to meet conditions to end longstanding sanctions.<\/p>\n<p>The lower-for-longer phenomenon that has emerged is literally a life-or-death issue for some oil producing countries.<\/p>\n<p>\u201cThe wild card is whether r\u00e9gimes will remain stable in this environment,\u201d Croft observed. \u201cCash enabled them to survive the Arab Spring. High expectations remain for social services and, if they can\u2019t pay for them, they\u2019re in real trouble.\u201d<\/p>\n<p>Countries like Iraq, Algeria, Libya, Nigeria and Venezuela are at particular risk political instability.<\/p>\n<p>\u201cSome of those countries will really struggle to meet their financial obligations at current prices, putting them at risk of political instability,\u201d she said. \u201cIf they can\u2019t cover wages and experience massive shortages, they could face food riots.\u201d<\/p>\n<p>\u201cWith four ongoing wars, the Middle East has never looked more unstable. Normally you have one, plus the Arab-Israeli conflict in the background,\u201d Croft added. \u201cThe question is what has to give, and what will give first.\u201d<\/p>\n<p>Some Saudi royal family dissenters want OPEC to slash production, a new political wildcard. A two billion barrels a day cut could push crude into the mid-$70 per barrel range, boosting oil revenue by more than $30 million a day.<\/p>\n<p>For now, that scenario is only an incremental risk, so don\u2019t expect significant price rises anytime soon.<\/p>\n<p>\u201cWe still have to work off very high inventories before the market reaches a balance in the second half of 2016, once they start to drop,\u201d she forecast.<\/p>\n<p style=\"text-align: center;\"><a href=\"https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5.jpg\" rel=\"attachment wp-att-6375\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-6375\" src=\"https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5-300x166.jpg\" alt=\"helima-croft1-5\" width=\"300\" height=\"166\" srcset=\"https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5-300x166.jpg 300w, https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5-768x425.jpg 768w, https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5-1024x567.jpg 1024w, https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5-720x399.jpg 720w, https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5.jpg 1268w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p style=\"text-align: center;\"><strong>RBC Capital Markets managing director and chief commodities strategist Helima Croft<\/strong><\/p>\n<p style=\"text-align: center;\"><em>Note: This report first appeared in the Winter 2015 edition of <a href=\"http:\/\/issuu.com\/realestateforums\/docs\/__cref_winter_2015_web\">Canadian Real Estate<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Robert Frank Plummeting oil prices have put unprecedented pressure on energy producers in Canada and around the world. The shale oil revolution has hammered energy prices, driving producer margins below the cost of capital. Clearly, something has to give. So far, American shale producers have defied a shakeout that had, early this year, seemed<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-6374","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Shale oil producers defy shakeout - Newscoverage<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/newscoverage.org\/index.php\/2015\/12\/15\/shale-oil-producers-defy-shakeout\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Shale oil producers defy shakeout - Newscoverage\" \/>\n<meta property=\"og:description\" content=\"By Robert Frank Plummeting oil prices have put unprecedented pressure on energy producers in Canada and around the world. 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