Reverberations from the oil price crash continue as more bankruptcies and increased geo-political tensions are causing a seismic shift in the long term outlook for energy production. With mounting pressure on oil-producing countries leading to civil unrest and more bankruptcies of highly leveraged oil companies, the bottom of the commodity cycle is well underway. The dominoes are falling and prices are rising.
Energy companies and oil trading firms that teamed up to build several mini-refineries that convert a swelling surplus of ultra-light U.S. crude into fuels for export seemed like a pretty safe investment bet for a while.
OPEC forecast on Thursday that oil supply from non-member countries will fall more sharply next year, a development that would suggest its strategy reaffirmed last week of defending market share not prices is working.
Crude oil prices are rebounding after a reported drawdown in crude inventory and a cut in the dividend by Kinder Morgan, the largest pipeline operator in North America, that is signaling yet again that energy companies can’t take much more pain.