Citigroup Oil Forecast | Russell T. Rudy Energy LLC
Many oil and gas producers have been able to mitigate the impact of collapsing oil prices by selling stock or debt to investors, or borrowing in high yield credit markets. “World Oil” quotes Citibank analysts who think this is about to change, with shale operators being the most affected.
During the week ended August 28, domestic oil production fell for the fourth straight week. According to the Department of Energy, this is the longest streak of declining output since January of 2012. To date operators had been able to borrow money by pledging undeveloped oil reserves as collateral, but Citibank predicts that this is about to change. With funding drying up for some producers, the U. S. could lose an additional 500,000 barrels of oil per day of production. This is roughly equivalent to the entire output of Ecuador, OPEC’s 11’th largest producer.
As a result of cuts in reserve based lending, and the ensuing production cutbacks, Citibank’s analysis indicates that weaker producers may face bankruptcy.
To read the article in its entirety, please go to http://www.worldoil.com/news/2015/9/09/citigroup-sees-us-oil-output-losing-500-000-bpd .
