American shale oil producers to issue debt reached $180 billion, at the same time to realize effective profit must in above $70, it was clearly and trump policy contrary, if oil prices fall will lead to further increase the pressure on oil companies to repay or cause enterprise financing a ponzi scheme.
Current status of shale oil industry
In fact, a lot of money is continuing to flow into shale gas and shale oil, which makes the valuation of the shale oil industry also rising.This is due to oil prices have been rising since the second half of 2017, pushed up oil prices hit a high of more than three years as rising demand for crude oil, the market forecast of shale oil industry will have a big rise in space, it is also a force money continued to flow.
This is a general understanding of the market, of course, the recent market situation is also true that gives a person with such illusion, as the U.S. sanctions against Iran, venezuela production declining, combined with recent Libyan crude exports blockade and tightening of global oil spare production capacity, market participants believe global crude oil output gap, there are at least 600000 barrels per day so prices will rise further in the future.
But higher oil prices are inextricably linked to the high debt behind the us shale industry.Falling profit margins and rising debt will eventually bring down the shale oil industry at a faster rate than markets think.
All ponzi schemes will eventually collapse.Just as a stock market crash would lead to the collapse of a ponzi scheme, falling oil prices and a poor shale oil economy and falling industry profits would eventually lead to a crisis in the oil market.
Profits gradually deviate from the break-even point
The oil-producing countries are the Permian basin, bakken oil field and eagle ford oilfield, the three oilfield crude oil output is up to 50% of the total U.S. oil production, Goldman sachs, according to a report of oil production in the three breakeven point is $45 to $55, if you want to truly profitable requires the rise in oil prices to above $70.
Has touched on the U.S. oil currently $75, for a short period of time is good for shale oil producers, the production could be further increased, but the rising oil prices led to the American economy is overheating, short time limit consumption by the people, it will produce adverse effect to raise interest rates expected, given the mid-term elections will come, so has been trying to trump to lower gas prices, the unavoidable and shale oil producers of appeal is divided.