The price of oil fell some more on Tuesday, down as low as $75.84 before closing at $77 a barrel. The decline is blamed on Saudi Arabia cutting prices rather than cutting output amid signs of global glut. That’s discouraging to America’s highly leveraged drillers, who had been hoping beyond hope that $80 would act as a floor on prices.
If prices don’t recover soon this could be the beginning of the end of the Great American oil fracking boom. Already ConocoPhillips and Shell have announced a pull back in onshore investment. But the real pain will be felt by the army of smaller independent producers.
There’s been a lot of talk about the breakeven prices per barrel needed to sustain drilling in various oil plays. Some say $80, others say $70. If you have acreage in a sweet spot you might be safe down to $50.For the archives.
Meanwhile is reporting, Bloomberg is reporting China/Russia reach natural gas deal:
Russia and China signed a second initial natural-gas supply agreement, following a $400 billion deal earlier this year, as President Vladimir Putin broadens links with the world’s second-biggest economy.
OAO Gazprom is discussing the supply of as much as 30 billion cubic meters of gas annually from West Siberia over 30 years, the company said yesterday. Russia may start selling gas to China within four to six years as part of an agreement with state-owned China National Petroleum Corp., Gazprom Chief Executive Officer Alexey Miller told reporters in Beijing.
Russia has turned to China to spur its economy as relations soured with the U.S. and Europe over the Ukraine crisis. Putin ended more than a decade of talks over supplying China with gas this year when it struck the May deal.Elsewhere, SayAnythingBlog has this headline: Three North Dakota counties responsible for 50 percent of jobs increase --
So yesterday I looked at how the oil patch core counties (Dunn, McKenzie, Mountrail, Williams) are responsible for over 50% of the employment increase in North Dakota in the last year.And so it goes with the new math. Dunn, 1; McKenzie, 2; Mountrail, 3; and, Williams, 3 (again).