RE:RE:Points RaisedIthaca is not a high cost producer, costs will be even lower when GSA comes on stream. Lower costs producers than Ithaca are mostly part of oil states, so the cost of the state should be added into the production cost to make a meaningful comparison - I would be interested in other views on this point.
What is happening now is very clear. OPEC and Russia cannot cope with the current oil prices for long. However, the drop off in US hedges at the turn of the year, linked to the rapidly falling US rig count means that OPEC and Russia will not have to cope with low oil prices for much longer. Remember, shale wells have a depletion rate approaching 50% per annum, if you are not drilling new wells constantly ......
The role of the US during the last year has been interesting. They don't like to interfere in the market unnecessarily and anyway, the US is ambivalent towards the damage being caused to their shale oil and gas businesses. US voters love cheap fuel. Also, the low oil price has greatly enhanced the effectiveness of the sanctions imposed on Russia.
The growing oil sector debt bubble is something different. This is now becoming a real concern. The Saudi's will only be allowed until the late Spring I expect to complete their fun and games. Actually the Saudi's won't have taken much persuading on this, the last thing they want to do is to trigger a global debt storm - bad for oil demand you know. However the pretence of continuity of Saudi policy will be maintained right up until it ends, that will be part of the understanding - not long now.
Sit on the sidelines if you wish, you will potentially reduce your risk a little. However, you may find yourself buying back in at 3 times the current share price - you do the maths.
Doug