The slide in oil prices has many wondering the role of the Saudis in the price decline. An article in the WSJ on Saturday said that the Saudis are sending mixed signals. At times they are stating that they are reducing output, but many question if this is really happening.
I’m a “CNBC junkie.” It’s always on when I’m in the office. It’s interesting that about 20%-30% of CNBC’s reporting is about energy – oil, natural gas and shale plays. As the price of oil has declined, all of the commentators on CNBC say that the Saudis are trying to kill fracking. The Saudis are trying to maintain market share which is becoming more difficult as more oil comes on the market and demand softens.
Many CNBC commentators seem to agree that if the price of oil gets to $65 or $70 a barrel, drilling in the U.S. will decline. The Saudis in the ‘80’s drove the price of oil down to again stop drilling in the U.S.
If oil prices decline to the $65-$70 range what does that mean to oil rigs in the U.S? When the price of natural gas took a dive to less $2 MMBtu, many of the gas rigs were move out of PA and WV to drill for oil in Texas as fracking started in the Eagle Ford and Permian Basin.