OPEC Oil Prices Hit Energy ETFs

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ETF TRADING RESEARCH
OPEC Oil Prices Hit Energy ETFs
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• 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.

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