Silver Ridge Resources says OPEC plan to push the marginal US shale oil producers out of business is working.
The latest investor note from Silver Ridge Resources tells clients that the OPEC plan to drive smaller, higher-cost US shale oil producers out of business appears to be working. The note cites news of the closure of oil rigs running at an average of 80 per week as oil languishes at or around multi-year lows.
Vivian Ericsson, chief commodities and resources analyst at Silver Ridge Resources said, “There doesn’t look to be much in the way of respite on the way either. Latest economic data out of China, the world’s largest energy consumer, seems to point to falling demand and the jury’s still out on whether Europe’s new quantitative easing program will actually help spur growth”
Though many US shale oil producers claim they can be profitable with oil prices at current levels, Silver Ridge Resources remains skeptical. “Some wells are profitable with oil prices as low as $30 but no oil company’s portfolio is made up of assets that can achieve that. Most, say, 70-90% of their assets, can only be profitable at $80 so it really is just a matter of time before financial reality catches up,” added Ericsson.
The firm’s note sounded a single note of optimism in the form of recent moves by various central banks to introduce stimulus in an effort to ward off deflation. “The European Central Bank’s introduction of a full-blown quantitative easing program may not help turn the trading bloc’s economic fortunes around but it’s almost certain that some of the €1.1 trillion of newly-created money it promises to unleash on the world’s financial system will find its way into the oil price by way of speculators,” wrote Ericsson.
About Silver Ridge Resources:
Founded in 2005, Silver Ridge Resources is an independent, full-service brokerage, investment planning and management concern committed to delivering innovative capital appreciation and preservation solutions to individuals and families with a high net worth. We place the welfare of our clients and their families first and we pride ourselves on having become the first port of call for their financial affairs. We consistently exceed our clients’ expectations by going the extra mile in terms of attention to detail, delivery of service and, most importantly, returns on investment.
From our headquarters in Shanghai, China and offices around the Asia Pacific region, we currently oversee the deployment of over $4.5 billion of assets on behalf of clients both in Asia and around the world.
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