Oil Drillers Hunker Down for More Pain One Year Into Bear Market

[Purveyor]

October 6, 2015 — 7:00 PM EDT
Updated on October 7, 2015 — 11:55 AM EDT

* Shell CEO plans for long slump amid `mixed signs' of recovery
* Prices may drop a further $10 in coming months, Goldman says

A year after oil sank into a bear market, the industry is still hunkering down for a long period of low prices, with Europe’s biggest producer seeing only the first glimpses of a recovery.

In the past five months, U.S. production sank by 590,000 barrels a day, or more than 6 percent. The bad news: Drillers are cutting costs with a speed and brutality not seen in decades, enabling many oil producers to maintain output even as prices remain low. Goldman Sachs Group Inc. sees crude falling a further $10 a barrel as storage tanks fill up in the coming months.

Royal Dutch Shell Plc is planning for a long stretch of low prices, Chief Executive Officer Ben Van Beurden said at the Oil & Money conference in London. While he sees “the first mixed signs for recovery,” the resilience of the U.S. shale industry and ample stockpiles suggest it’ll take more time to rebalance demand and supply, the CEO said.

West Texas Intermediate crude, the U.S. benchmark, slumped by almost half in the past year and traded at $48.12 a barrel at 11:54 a.m. in New York on Wednesday. The world has been awash with crude since the Organization of Petroleum Exporting Countries decided last November not to reduce output, focusing instead on protecting its market share from rising shale supplies.

“We see some light at the end of the tunnel,” OPEC Secretary-General Abdalla Salem El-Badri said at the conference. With industry spending cuts totaling $130 billion, the market is now improving and prices may rise in the coming months, yet the supply overhang means the current situation could last as long as two years, he said.

more...

http://www.bloomberg.com/news/articles/2015-10-06/oil-drillers-hunker-down-for-more-pain-one-year-into-bear-market

[Algernon Moncrieff]

1. It's a cycle

Slumping China and Bakken crude drove prices under 50. Now drilling in NoDak has ground to a halt. It will resume when prices pass back over $60, which is as inevitable as the changing of the seasons as long as we drive gasoline and diesel powered vehicles. If we were smart enough to switch to electric and NG powered vehicles, we wouldn't be having these problems in the US.

[Wellstone ruled]

2. Notice the increase in slam the Electric

Auto stories and the amount of posts out on the net. Just saw a story from California were the Oil Lobby just killed a bill requiring the State to reduce Petro Based fuels by fifty per cent 2030. Tell you what,these Oil Guys better wake up,their day is long gone. There are tons of very affordable Electrics coming and they can't stop it. All about the Economics.