The rapid growth in oil prices of the WTI over the last two weeks they have risen by more than 20% after a fall from June peaks) can lead to increase in production in the shale deposits of the United States that will end the oil rally, warns, citing experts, the newspaper the Wall Street Journal (WSJ).
Some major shale oil companies, including Devon Energy Corp. and Pioneer Natural Resources Co., already warned their investors about the readiness of the fall to increase the amount of drilling, the newspaper notes. According to the Jefferies Group, ten companies specializing in the development of shale deposits, has recently increased their budgets by about $1.1 billion and is ready to launch new wells. In particular, Devon Energy plans to Commission seven new wells in Texas and Oklahoma, and Pioneer Natural Resources ready to return to work five previously abandoned wells in Texas, the first of which should provide oil in September.
Experts fear that the increasing production of shale oil will increase the imbalance in the oil market, where supply still exceeds demand, writes the WSJ.
“I’m really worried. So a rapid increase in activity, in my opinion, premature and may limit the possibility of further increases in oil prices,” — said an analyst at Robert W. Baird & Co. Daniel Katzenberg.
According to investors and analysts, the ceiling price of WTI of around $50 per barrel, as it is a price many producers of shale oil sufficient to make extraction profitable.
When in June for several days, oil traded for more than $50 per barrel, the managers bet on falling prices: open bearish positions was only 53,377 million, the newspaper said. Over the past two months the number of open bearish positions rose to 220 thousand, marking a record for ten years.
Really strong fall in oil prices is not worth waiting, says Garvey Kang, managing a portfolio of $2.5 billion in Deutsche Enhanced Commodity Strategy Fund. In his opinion, below $35 per barrel WTI crude oil price can not fall, because after its fall below $40 a group of small-scale producers will leave the market, which will lead to reduced supply.
In the course of trading on the ICE futures exchange on Monday, the price of a barrel of WTI crude oil, which rose in the previous session to a six-week high of $from 48.94, down to $47,66 (-2,6%). The price of Brent crude oil at the minimum fell by 3.36% to $49,17 per barrel.