Silver Ridge Resources says it doesn’t expect the rally in oil prices to last despite news emerging of a significant drop in the number of operational US oil rigs.
Falling capital expenditure and a noticeable drop in the number of operating US oil rigs has helped to provide the crude oil price with some respite from its 7-month slide but analysts at Silver Ridge Resources say they don’t expect the rally to last. Prices for West Texas Intermediate rallied to as much as $54.24 a barrel on Tuesday.
Vivian Ericsson, chief commodities and resources analyst at Silver Ridge Resources said, “the mild rebound we’ve witnessed had a lot to do with hopes that prices might be bottoming out but all it’ll take to knock prices back down again is news of weak consumer data out of the US or China.”
The precipitous decline in prices has been partly driven by OPEC’s refusal to cut production to support prices. The cartel – whose members produce some 40% of the world’s crude oil – is attempting to squeeze new, high-overhead shale oil producers in the US out of the market by driving prices down to levels where it is economically unviable for them to continue operating and Silver Ridge Resources says the biggest members including Saudi Arabia and Kuwait are more than capable of waiting out the most stubborn shale producers.
According to data from respected oil services company, Baker Hughes, energy companies contending with lower prices decommissioned 61 rigs in the week to January 9th. “That’s the most in nearly 25 years and shows how much the lower prices are hurting margins at some of the higher cost operations,” added Ericsson.
Silver Ridge Resources maintains its view that central bank responses to falling economic growth and deflation will inevitably result in a boost in demand for oil but that, for the time being, prices are set to remain under pressure.
About Silver Ridge Resources:
Founded in 2005, Silver Ridge Resources is an independent, full-service brokerage, investment planning and management concern committed to delivering innovative capital appreciation and preservation solutions to individuals and families with a high net worth. We place the welfare of our clients and their families first and we pride ourselves on having become the first port of call for their financial affairs. We consistently exceed our clients’ expectations by going the extra mile in terms of attention to detail, delivery of service and, most importantly, returns on investment.
From our headquarters in Shanghai, China and offices around the Asia Pacific region, we currently oversee the deployment of over $4.5 billion of assets on behalf of clients both in Asia and around the world.
Contact Silver Ridge Resources:
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8675586243512
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