The State owned company Saudi Aramco announced that it is cutting prices to a record low $2.00 per barrel discount to Asia, Europe and all grades of crude to US refineries. To reinforce Saudi Arabia’s vow to crush US oil shale producers, Saudi prince, Turki Al-Faisal said: “Saudi Arabia won’t give up oil market share at this time for anybody.”
Iraq is adding another 300,000 barrels per day to the world market. It reached an agreement with the Kurds and Turkey to ship the oil through the Mediterranean Turkish port of Ceyhan.
The effect of the Oil War is having a severe impact on US producers, especially within the oil shale industry. In North Dakota’s Baaken formation oil fell to a low of $49.69 per barrel. Prices are also falling in Colorado, Texas and Oklahoma. Oil prices are down 37% in the past 5 months.
Speculators have jumped aboard the oil crash by betting heavily on put options on the Futures Market. Put options with a strike price of $40 per barrel hit an all time high of 880,000 contracts for nearby crude.
Oil executives are scrambling to try and forecast future plans for next year. One analyst is quoted as saying: “If Brent’s at $70 and I’m at $60, then I have to start asking, does it economically make sense too keep drilling.” “They might start reallocating capital, you might see projects slowed or shut down.”
The Trans Canada Corporation put a “hold” on studies for the Cacuna Oil Export Terminal in Quebec.
Gas at the pump is falling fast. At an OnCue station in Oklahoma, gas was selling for $1.99 per gallon. Nationwide gas is selling for $2.74 per gallon. It is expected that prices will fall another 15 to 20 cents per gallon to catch up with falling oil prices.
Here’s a look at how some of the key oil shale stocks are getting slammed. The prices listed are for the 52- week high and low and the closing price on December 5, 2014.
Whiting Petroleum (WLL) 52-week high/low $92.92/$37.25 Last $37.25
Continental Resources (CLR) 52-week high/low $81.91/$37.43 Last $38.23
Chesapeake Energy (CHK) 52-week high/low $31.49/$16.69 Last $19.29
Hercules Offshore (HERO) 52- week high/low $6.74/$1.05 Last $1.20
Apache Corporation (APA) 52-week high/low $104.57/$60.02 Last $62.85
Cabot Oil and Gas (COG) 52-week high/low $41.78/$27.75 Last $31.25
Pioneer Natural Gas (PXD) 52-week high/low $234.60/$139.06 Last $143.00
Range Resources (RRC) 52-week high/low $95.41/$58.08 Last $58.93
Southwestern Energy (SWN) 52- week high/low $49.16/$29.45 Last $39.15
Plains All American (PAA) 52-week high/low $61.09/$46.63 Last $50.42
In a bizarre twist of events one of the major beneficiaries of the oil slide are the big, major oil companies such as Exxon Mobil. A spokesperson for Exxon said that they could afford oil at $40 per barrel. Who benefits most, whether it is the Saudis or big oil companies is impossible to tell. Big oil would stand to retain its dominance in the industry.