• 2 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 5 minutes Middle East on brink: Oil tankers attacked off Oman
  • 8 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 39 mins The Plastics Problem
  • 3 hours Emissions Need To Be Halved To Avoid 3C Warming
  • 3 hours Confirmed: UN Expert Urges Probe Of Saudi Prince Over Khashoggi Killing
  • 37 mins OPEC, GEO-POLITICS & OIL SUPPLY & PRICES
  • 30 mins Hormuz and surrounding waters: Energy Threats to the World: Oil, LNG, shipping markets digest new risks after Strait of Hormuz attack
  • 5 mins Coal Boom in Asia is Real and a Long Trend
  • 53 mins The Magic and Wonders of US Shale Supply: Keeping energy price shock minimised: US oil supply keeping lid on prices despite global risks: IEA chief
  • 3 hours The Pope: "Climate change ... doomsday predictions can no longer be met with irony or disdain."
  • 57 mins Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 53 mins US to become net oil exporter in November: EIA
  • 22 mins Trudeau approves Trans Mountain Pipeline
  • 4 hours Fareed Zakaria: Canary in the Coal Mine (U.S. Dollar Hegemony)
  • 3 hours Hydrogen FTW... Some Day
  • 1 hour US Shale Drilling lacks regulatory body.
Alt Text

Smart Money Turns Increasingly Bearish On Oil

Over the past month, hedge…

Alt Text

Oil Resilient Despite Trade Talk Failure

Oil prices fell and quickly…

Alt Text

Oil Prices Jump On Hopes Of End To U.S.-China Trade War

Oil prices erased earlier losses…

Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

Trending Discussions

Share Prices For Oil Companies Tumble Along With Oil Prices

The share prices of oil companies were thrashed on January 5 as the ongoing slide in oil prices prompted another round of forecast revisions.

WTI dropped below $50 per barrel during trading on January 5, hitting fresh 5 ½ year lows. While it is hard to explain the day-to-day fluctuations in oil markets, much of the blame for the renewed fall in crude prices came from Citigroup, which issued a bearish oil projection for the rest of this year.

Citigroup’s Ed Morse, head of the bank’s commodity division and a respected voice on oil price forecasts, said that there is “trouble ahead in 2015.” His latest forecast marked another downward revision for 2015. Morse now believes WTI oil prices will average just $55 per barrel for the year, down from a previous prediction of $72 per barrel and below some of even the most pessimistic forecasts to date.

Morse says that prices for 2016 do not look much better – he estimates WTI will average $63 per barrel next year, a sharp decline from his prior estimate of $80 per barrel. Related: Low Prices Lead To Layoffs In The Oil Patch

Part of the ongoing gloom for prices is the surprising output from producers around the world. Not only is OPEC leaving its production quota unchanged in the face of crashing prices, but Russia continues to ratchet up production, at least for the time being. In December Russia reported a 0.3 percent increase in oil output, reaching 10.66 million barrels per day. That is a record for Russia since the collapse of the Soviet Union.

Iraq has surprised analysts with production nearly hitting 3 million barrels per day for the month of December. That too was a multi-decade record. Not since the 1980’s has Iraq churned out so much oil.

Piling on, Saudi Arabia cut the prices for oil that it exports to the U.S. but raised them for oil moving to Asia. In what could be seen as a move by Riyadh to keep pressure up on U.S. shale producers, Saudi Arabia’s decision to slash prices for crude delivery in February added more momentum to falling oil prices.

Such phenomenal levels of oil output come at a time when the world is already oversupplied, which has forced down the share prices of several of the oil majors.

Chevron was downgraded to “neutral” from “buy” by Citigroup amid the dismal pricing environment. Not only is Chevron suffering from low revenues for its oil, but it is also heavily exposed to liquefied natural gas with billions of dollars tied up in export terminals in Australia. With LNG prices falling in concert with oil, Chevron is feeling the pain.

Oasis Petroleum and Southwestern Energy, two smaller oil and gas exploration companies, were also downgraded on January 5 by Susquehanna.

The plunge in oil prices on January 5 prompted a broader sell off in the markets, and other energy companies took a beating as well.

Related: Low Oil Prices Drive US Rig Count Down

BP, which is reeling from its exposure to Russian state-owned oil company Rosneft, is seeing profits decline under the crumbling Russian currency and western sanctions. BP’s share price was down more than 5 percent on January 5. The shares of Continental Resources, a major producer in the Bakken, were off by 10 percent. The despair spread to other energy sectors – coal and natural gas stocks were also way down.

The prospect for a turnaround took a hit with Citigroup’s latest forecast. Much of the oil price crash was a supply-driven phenomenon, the bank says, a development that may not ease anytime soon. U.S. oil production, despite the ongoing beating that individual companies are taking, may not immediately take a hit. Iraq may continue to lift oil production now that an agreement has been hammered out between Baghdad and Kurdistan. Saudi Arabia seems determined to keep up output in order to maintain market share.

There have been repeated predictions of a bottoming out for oil prices, but for investors in energy companies, the carnage is not over yet.

By Nick Cunningham of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment





Oilprice - The No. 1 Source for Oil & Energy News