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Strippers exposed as oil price falls

Crude oil is trading higher amid increasing signs of consolidation in the markets after a 20% drop in prices during the past fortnight.

Despite the United Arab Emirates saying that it could cope with a price as low as USD 40 per barrel, US hedge funds have been placing more longs for the second week running.

In Libya force majeure has been declared at two major oil export terminals. Libya produces around 800,000 barrels per day.

The US onshore rig count is at its lowest since June the 20th dropping by 29 to 1546 last week.

Energy junk bonds are trading at 10% above US treasuries.

US 'stripper wells', small 'mom and pop' oil companies which produce as little as 2 barrels per day but amount to 11% of US production are under intense pressure. With the 'strippers' most exposed, and therefore vulnerable, market sentiment continues to tip towards consolidation.

02:36 minutes
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