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Energy Credit Risk Hits 1000bps As WTI Crude Nears $43 Handle
As the USDollar surges post-payrolls, WTI Crude futures are re-tumbling (but but but energy stocks were up yesterday!!!). With a $43 handle, WTI does not have far to fall to new cycle lows... and that has spooked professionals in the credit markets (as opposed to the machines and amateurs in the momo stock markets) as Energy credit risk surges back to 1000bps once again...
Energy Credit risk is soaring once again...
As WTI tumbles near $43 handle...
Charts: Bloomberg
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It will all magicly clean up as soon as Exxon eats the dead pieces it desires..
Try a washout to the 20s. Options Bitchez....Cash it and stack it.
RIPS
Bye bye Brazil. Bye bye Venezuela (altho Obamarsehole is making sweet noises to them)...
In this upside down world. How is a strong USD winning in a race to the bottom ?????
A lot of people who BTFD must be getting creamed at this point.
The US should cut production
...and I know how the "US" can do what you're saying...
They can Drone Shell, Exxon, Chevron, and so on. Just bomb the oil extracting companies to the stone-age. That will solve the problem
If you read the earning reports the past week, all of the frackers increased production by 20-40 % from the same quarter last year. When will production collapse?
Once the bankruptcies start. Everyone is just trying to ramp production and outlast the other weak hands.
all producers are price takers.
stopping production is worse than keeping the wells pumping.
Venezuela and co. get crushed by the low oil prices.
freshly printed money to finance frackers would show OPEC...
What makes you think the OPEC members are not in the same situation as the frackers? They depend on oil revenues to fund their government. Stopping production means the government will be overthrown
The way I understand it, lateral holes produce for about 3 years once tapped, the bulk in the first two years. Primary cost is drilling and fracking, so once that money is sunk into the ground, you might as well open it and get some money back -- some back is better than none back. If you are staring bond payments in the face, you'll take any money to keep you from bankruptcy and losing everything, even if you know the oil will be worth more later. Price decline began its latest iteration mid 2014, so we've got another year before we see significant drops in output. Problem is, the smaller energy companies aren't hedged forward that long, which is why the pace of bankruptcies will quicken by about October.
American oil production IS the over supply in the world oil supply. Obama's " Energy Independence Plan " sounded good to the voters but was designed to destabilize Russia's economy. It didn't work.
Of course why not blame the Saudis for not cutting production?? The didn't cut to protect market share. This ain't 1973 anymore, where they were the largest producer by far!
As an added bonus of Obama's " Energy Independence Plan ", is that the US$ is not making out into the world through foreign oil purchasing. No US$'s circulating means you get the AIIB and the BRICS Bank to compensate for the lack there of.
Obama has killed the world reserve PetroDollar.