Silver Ridge Resources predicts very little let up in the rate at which US drilling rigs are being idled as oil prices head for $40.
Silver Ridge Resources says It cannot envisage an easing in the rate at which US drilling rigs are being mothballed until the end of the 2nd quarter of 2015. The Shanghai, China-based primary dealer says that production remains buoyant despite oil prices that are within striking distance of $40 a barrel.
Prices are heading for their biggest weekly falls since January as supply continues to outstrip demand by a considerable margin and inventory stores approach full capacity. West Texas Intermediate is trading below $45 a barrel leaving the rally in prices that began in January a distant memory in investors’ minds.
According to Baker Hughes, the world’s largest oil services company, the US rig count fell by another 56 in the week ended Friday 13th March bringing the total since June last year to 866.
“The rig count can be a little misleading” said Vivian Ericsson, chief commodities and resources research at Silver Ridge Resources. “Shale producers have improved production efficiency so much that, despite the drop in rig numbers, the US industry is still producing more oil than any time in the last 40 years.”
The fall in rig numbers has been accompanied by a jump in industry redundancies as producers both large and small cut back dramatically on capital expenditure in response to falling demand both at home and abroad.
Silver Ridge Resources says it is not yet ready to call a bottom in the market. “Hopes of an end to the slide in oil have evidently been dashed and, with prices sub-$45, it really is a case of ‘look out below’. We don’t see a return to $30 like we did in 2008 but there’s still further to go in this rout,” concluded Ericsson.
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.
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