Continued oil price crash reached lowest level
By MoneyTimes
Aug 13, 2015 09:21 PM EDT
Regions
An oil well owned and operated by Apache Corporation in the Permian Basin are viewed on February 5, 2015, in Garden City, Texas. The well produces about 55-70 barrels of oil per day. Apache sends an estimated 50-52 million cubic feet of natural gas to this plant per day. As crude oil prices have fallen nearly 60 percent globally, American communities dependent on oil revenue prepare for hard times. Texas, which benefited from hydraulic fracturing and the shale drilling revolution tripled its production of oil in the last five years. The Texan economy saw hundreds of billions of dollars come into the state before the plunge in prices. Across the state, drilling budgets are being slashed and companies are notifying workers of upcoming layoffs. According to federal labor statistics, around 300,000 people work in the Texas oil and gas industry, 50 percent more than four years ago. (Photo : MoneyTimes)
The U.S. crude oil's price continued to crash allowing it to reach its lowest level in more than six years.
Benchmark U.S. crude oil has fallen to $1.88 equivalent to 4% making it settle at $43.08 a barrel In New York City, which is at its lowest since March 2009. The front-month continuation contract for U.S. crude had previously struck a 2015 low of $42.03.
Tariq Zahir who is the managing member at Tyche Capital Advisors in Laurel Hollow New York believed that oil prices are heading lower and that it is about time to sell any and all rallies.
The latest decline came as the Organization of Petroleum Exporting Countries or OPEC said its production went up to a three-year high. Also, China which is the No. 2 consumer devalued its yuan. This is due to a softer economic growth adding to the cause for lower crude demand.
U.S. crude oil continues to decline since reaching a high of $61.43 on June 10 of this year.
Crude has become under pressured due to several fronts. Oil production in the U.S. and Canada multiplied, including the market share coming from Iraq and other countries causing additional oil supplies. Middle East country like Saudi Arabia along with other OPEC nations continues to extract oil at high levels and Iranian oil will make a comeback after being banned by sanctions.
OPEC projected that oil supplies coming from other countries outside the group will increase by 90,000 barrels per day this year, which is a sign that crude oil price collapse was taking longer than thought to hit the North American shale oil industry and other competing sources.
This is going to be a big advantage for vehicle owners, drivers, shippers and airlines that enjoy the lower fuel prices due to the fall on the crude oil's price while the oil industry is getting lower profits forcing them to cut down on expenditures and employment.