Nankai Group - The Big Oil Battle Has Started.
Announcement posted by Market Data Group 09 Jun 2015
Nankai Group: OPEC is succeeding in its bid to crush the challenge for market share from US shale oil producers.
Nankai Group - OPEC (Organization of the Petroleum Exporting Countries) says it is winning its battle to squeeze high-cost oil producing rivals in the US shale oil sector.
The cartel’s policy of maintaining high production levels to drive prices lower has resulted in a 60% plunge in the number of US oil rigs in operation.
“The large drop in oil prices since June last year has dealt the high-cost US shale oil producers a blow they’re unlikely to recover from any time soon,” said a Nankai Group analyst. “We expect investors who bankrolled producers while prices were over $100 a barrel to think twice before getting involved again given how quickly and easily OPEC’s strategy has decimated its competition.”
Saudi Arabia’s production alone reached a peak of 10.3 million barrels of oil a day in the month of April and there are no signs of it or any other OPEC members reversing policy at the cartel’s June meeting in Vienna, Austria.
“Saudi Arabia could have easily reduced production to help keep prices up but that would have given shale oil producers time to make their operations even more efficient and, ultimately, more able to withstand lower prices in the future. Their strategy is working well and while the battle isn’t over, we have more faith in the depth of their pockets than we do in investor appetite for shale oil company debt,” explained the Nankai Group analyst.
Nankai Group has been an advocate of holding small cap oil exploration stocks for capital appreciation and oil major equities for the healthy dividends they pay.
“We see this space as part of our long-term investment strategy and will look to add to positions on pullbacks,” concluded the analyst.
The cartel’s policy of maintaining high production levels to drive prices lower has resulted in a 60% plunge in the number of US oil rigs in operation.
“The large drop in oil prices since June last year has dealt the high-cost US shale oil producers a blow they’re unlikely to recover from any time soon,” said a Nankai Group analyst. “We expect investors who bankrolled producers while prices were over $100 a barrel to think twice before getting involved again given how quickly and easily OPEC’s strategy has decimated its competition.”
Saudi Arabia’s production alone reached a peak of 10.3 million barrels of oil a day in the month of April and there are no signs of it or any other OPEC members reversing policy at the cartel’s June meeting in Vienna, Austria.
“Saudi Arabia could have easily reduced production to help keep prices up but that would have given shale oil producers time to make their operations even more efficient and, ultimately, more able to withstand lower prices in the future. Their strategy is working well and while the battle isn’t over, we have more faith in the depth of their pockets than we do in investor appetite for shale oil company debt,” explained the Nankai Group analyst.
Nankai Group has been an advocate of holding small cap oil exploration stocks for capital appreciation and oil major equities for the healthy dividends they pay.
“We see this space as part of our long-term investment strategy and will look to add to positions on pullbacks,” concluded the analyst.