There Will Be No OPEC Cut
By Matt Smith
OilPrice.com
Fri, 12 February 2016
Two hundred and seven years after the birth of Charles Darwin, and the final trading day of the week is evolving into a rambunctious rally for the crude complex. Once again the market is at the mercy of OPEC rhetoric, as comments from the UAE’s energy minister have been interpreted as a sign of collusion for a production cut. Here are three reasons why this news is more likely to be poppycock than progress:
1) OPEC’s tactics are working. The US oil patch is debilitating at a rapid pace. Oil firms are maxing out credit lines, as shrinking revenues from lower oil prices mean cash flow is not enough to service debt obligations. The WSJ reports today a number of companies have drawn down their revolving credit lines – signaling potential bankruptcy ahead. Midstates Petroleum, Linn Energy and Sandridge Energy are three examples, having recently burned through their collective cash cushion of $1.5 billion.
The Rest…HERE
