OPEC Oil Prices Hit Energy ETFs - PowerPoint PPT Presentation

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OPEC Oil Prices Hit Energy ETFs

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OPEC members decided to continue flooding the market with oil. The decision is having a negative impact on Oil and Energy ETFs. – PowerPoint PPT presentation

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Title: OPEC Oil Prices Hit Energy ETFs


1
ETF TRADING RESEARCH
OPEC Oil Prices Hit Energy ETFs
2
Welcome to ETF Trading Research Your premier site
to instantly diversify your portfolio to make
more money! Want More Research and Strategies on
ETFs visit our website ETFtradingresearch.com
3
  • Hi, My name is Corey and Im with ETF Trading
    Research, today were reviewing our recently
    published article

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  • OPEC Oil Prices Hit Energy ETFs

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  • Last week, the members of Organization of
    Petroleum Exporting Countries or OPEC met. They
    decided to continue pumping oil at a record pace
    and let OPEC oil prices fall as the supply glut
    widens.

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  • The immediate reaction to the decision had a
    negative impact on oil prices. The price of a
    barrel of WTIC crude oil plunged 5 to the lowest
    levels since 2009.

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  • As a result, analysts are slashing earnings and
    valuations of oil and gas companies. And oil and
    energy ETFs that hold these assets are being
    taken down as well.

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  • Why Does OPEC Want Lower Oil Prices?

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  • OPECs decision to continue flooding the global
    market with more oil than it needs wasnt
    unanimous. Many countries want the cartel to cut
    back production to support oil prices.

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  • But the kingpin of the cartel, Saudi Arabia,
    wants to protect their market share from surging
    oil production in the US, Iraq, and Russia.

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  • In short, they hope that keeping oil prices low
    will curb oil production from non-OPEC oil
    producers. Once they have forced these producers
    out of business or at least force them to halt
    expansion,

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  • then OPEC wont need to cut back their production
    as much to support higher oil prices. In short,
    this is a high stakes game of chicken and
    theyre betting that they can outlast their
    upstart competition from US shale oil and other
    oil producers.

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  • Impact of OPEC Oil Prices and US Oil Production

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  • Low oil prices are having a big impact on US
    shale oil producers. Many smaller US oil and
    gas companies have already missed bond payments
    or been forced into bankruptcy.

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  • According to the former head of oil firm EOG
    Resources, Mark Papa, "We are about to see a
    pretty dramatic decline in U.S. production
    growth." US oil production has peaked. Its
    expected to fall from 9.6 mbpd to 8.6 mbpd in
    2016.

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  • Needless to say, a decrease in US oil production
    will be a major headwind towards the US achieving
    energy independence.

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  • Who Benefits The Most From Lower OPEC Oil Prices?

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  • In the long run, the big winner from the price
    war will be major oil and gas companies.

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  • Companies like Exxon Mobil (XOM) and Chevron
    (CVX) have the resources and financial stability
    to withstand a price war with OPEC unlike the
    smaller US oil producers.

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  • Whats more, many of these companies missed the
    boat on the initial wave of US shale oil
    production. As small companies falter the big
    boys will be there to pick up the pieces for
    pennies on the dollar.
  • Get started with you Oil ETF research.

22
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