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U.S. oil producers feel the pain

Tuesday, January 12, 2016 - 01:08

The massive drop in oil prices is hurting U.S. oil producers, which have already slashed costs. They now face a shakeout, says an analyst. Bobbi Rebell reports.

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A roller coaster ride for crude oil prices, but, by the close of the trading day, U.S. crude was in the red, yet again. The loss of about three quarters of the value of a barrel of oil in the last 18 months has the U.S. energy industry on edge. The sector cut costs in 2015, but that can only go so far, says Caprock Risk Management CEO Chris Jarvis. SOUNDBITE: CHRIS JARVIS, CEO, CAPROCK RISK MANAGEMENT (ENGLISH) SAYING: "There is not much more they can do to survive, and, if oil prices continue to go lower and stay at these levels, I certainly think, there is going to be a lot of issues with the bank debt and poorly capitalized companies." He believes many of the highly leveraged energy companies will be eaten up by the stronger companies or go bankrupt, leading to consolidation this year. That in turn will bolster the entire U.S. industry and allow it to better compete in a brutal global market. On Tuesday, predictions got even gloomier for the price of oil. Standard Chartered said crude could drop by two-thirds to $10 a barrel. And there is little hope of a slowdown in supply: Reuters Polls show analysts expect commercial crude oil stocks, distillate and gasoline stocks all likely rose last week.

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U.S. oil producers feel the pain

Tuesday, January 12, 2016 - 01:08