Just as we saw with the stock market following Draghi’s December disappointment dead-cat-bounce, WTI Crude has collapsed back topost-Draghi lows, erasing all the WTF bounce from Friday. The driver – aside from the fact that there was no driver of the ramp – appears to be comments from Emirates Bank on the resilience of US shale (and the surprising lack of production drops for now).
US shale-oil producers could decide to stay in the game with prices currently hovering around $40/barrel, according to Edward Bell at Dubai-based bank Emirates NBD.
Market participants expected some shale producers to be pushed out as they struggled to compete in the low-price environment, and while US production is falling, it’s not been happening at a rapid rate. With prices well off their recent lows, shale producers could decide to weather the storm and try to keep output high. US production has dropped around 120K/day so far this year, but still remains above 9M barrels.
This post was published at Zero Hedge on 03/14/2016.
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