Gulf, shale producers feel the heat as oil plummets

Abu Dhabi: Gulf countries and shale producers are feeling the heat as oil prices continue to plunge due to over production and weak demand. However, the Gulf countries are better placed because of huge cash reserves when compared to shale producers, analysts said.

From $115 in June last year, global benchmark Brent has dropped to less than $45 on Tuesday. West Texas Intermediate, the US benchmark, was trading at 38.97 per barrel at 1:21pm UAE time.

The number of rigs in the US has been falling steadily since oil prices started to decline. From 1,609 rigs in last October, the number of shale rigs fell to 674 rigs this month.

According to the US Energy Information Administration’s Drilling Productivity Report (DPR), crude oil production in August from seven major US shale plays is expected to decline by 91,000 barrels a day to 5.36 million barrels a day.

Louis Bresland, Alix Partners Managing Director and head of the firm’s Middle East Oil, Gas & Chemicals practice told Gulf News that shale producers have greatly impacted, but most have used this as an opportunity to increase productivity and reduce lifting costs. (by Fareed Rahman, Senior Business Reporter, Gulf News)