RE:Increase In U.S. Rig Count Will Not Cap Oil Pricesjubatus1 wrote: https://oilprice.com/Energy/Energy-General/Increase-In-US-Rig-Count-Will-Not-Cap-Oil-Prices.html
It's sad that people don't understand this already and just listen to the bears and shorters on TV. Did people miss that there were hundreds more rigs going all last year that lead to the precipitous declines we have seen since last fall? Suddenly adding a handful of rigs will stop the drop? Only 3 horizontal rigs added last week as well, most adds were conventional with far less initial production than you get compared to shale wells.
There will be no quick recovery for shale. Lenders are 100% on the defensive and there is no easy money to be had any more. Workers have lost faith in the industry and have moved to safer jobs to be able to make their mortgage payments and just to live because any job in oil is one Saudi policy shift from sending you back collecting EI (if you can even work long enough to qualify for EI again). Producers are only concerned with saving their balance sheets and any hedges are just to get more profits from existing production. No producer would hedge enough in this price environment to cover all existing plus new added production, they just thank their lucky starts to get a little more profit from existing production to pay massive debts and interest payments.