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Another Nail in OPEC’s Coffin: Fracking Old Wells Dropping U.S. Breakeven Points Further

Source: https://thenewamerican.com/tech/energy/item/26730-another-nail-in-opec-s-coffin-fracking-old-wells-dropping-u-s-breakeven-points-further - Aug 21, 2017

Ed Morse, Citigroup’s head of commodity research, told a Bloomberg television audience last week that OPEC’s position “is not sustainable over a long period. In the end, the markets are going to win, and [the winner] is going to be shale. If we’re in a $40 to $45 world, we’ll have enough drilling to add to the [world’s] surplus.”

Morse is reiterating the mantra sung for years: OPEC has long since run out of options and has all but lost its monopoly influence over world crude oil prices. If it reduces supply, prices go up, making U.S. frackers more profitable and inviting more capital in to expand production. If it increases supply, the lower prices cut further into each member’s cash flow, forcing them to continue to deficit spend without gaining any advantage over the Americans.

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Category: General Business