The collapse of shale illusions: time to pay the bills

Lower oil prices jeopardize the development of shale deposits, confirmed the World Bank economists. Even though cheap oil will support the global economy, the world will be divided into winners and losers from this slowdown.
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The four-year period of price stability in the oil market is behind us, experts have concluded World Bank (WB) in a new report, the analytical chapters of which made public yesterday. In 2015, they expect lower prices, and in 2016 - a slight increase them, without naming specific figures at this. The main reasons for oil prices a sharp fall in the second half of last year World Bank experts see the "combination of factors", including "a few years surprises" on the part of the larger-than-expected oil supply and a smaller-than-expected demand, "the weakening of geopolitical risk in some parts of the world "," a significant change in the political objectives of the Organization of petroleum exporting countries (OPEC), "as well as" increasing the value of the dollar. " Comparative share of all of these reasons, in their opinion, "remains uncertain", however, "a dominant role, seems to have played the factors associated with a proposal to" oil - in particular, due to the shale energy boom in the United States.

Slates - at risk

Expected in the near futurepreservation of low oil prices threatens the exploration and development of new deposits and creates a particular risk for the investment in the development of unconventional sources such as shale oil, oil sands and deep sea oil fields, the WB experts confirm the fears of many market experts.

In conditions of low oil prices, the development of new deposits, especially the hard-to and heavy oil (including slate) is likely to be suspended, certain asset manager UK "Fund Maguta" Plato Maguta. "The profitability of such deposits reached not less than $ 80 per barrel at the prices. For oil and gas companies, of course, it will affect negatively, since reduced investments in the near future will fall prey, and accordingly, the operating income. Recovery of investment in oil production can be expected no earlier than the end of 2015, when prices on the expectations of market participants will increase to $ 75-80 per barrel ", - he says.

Companies producing shale oil in the US, are not afraid of the price of $ 60 and even $ 50 a barrel, as the profitability of production at the districtx has been increasing steadily, it objected one of the leading experts in this field, chairman of TMK-IPSCO Peter Golitsyn's board of directors. According to him, the mining companies no longer need the break-even price (break-even price) at $ 75 per barrel to continue drilling in shale, and a significant proportion of the drillers feel that they can fall up to $ 42 per barrel.

The shale production in the United States since 2011 invested $ 1.5 trillion of borrowed funds, and as a result of falling prices the amount of "junk" bonds issued by oil companies, has grown in recent years from 5% to 15%, says economist Vladislav RANHiGS Ginko. "And this percentage will grow, if the fall in oil prices will not stop", - he explained the "Expert Online", adding that he sees prospects for growth in prices for "black gold".

Winners and losers

On Thursday, oil quotations show weak growth after a record fall of eve: Brent traded at around $ 50.8 per barrel for WTI barrel offer a little less than $ 49. But the top reasons not for a serious correction, says analyst, "Alpari" Anna Kokoreva. & LAQuo; Rumors of the death of the King of Saudi Arabia has not yet been confirmed. Statistics on stocks of petroleum and other fuels is very contradictory. According to the US Energy Information Agency, crude oil inventories fell by the results of last week by 3.06 million barrels, but significantly increased stocks of gasoline and distillates - by 8.1 and 11.2 million barrels, respectively. Actively continue to increase oil production and exports to America. In November, the country increased its daily production to 9 million barrels, is the maximum figure for the last 20 years. Export of oil increased by 34% - up to 502 thousand barrels per day.. US authorities are considering the possibility to completely lift the ban on the export of hydrocarbons, which in the future will further increase the volume of oil exports and have a negative impact on prices, "- she says, and adds that the likelihood that oil prices may fall even lower is maintained. If for North Sea oil price fixes below $ 50 per barrel, we can talk about a further fall to $ 43. WTI in this case fall to $ 39-41 per barrel.

World Bank experts believe that the reduction in price of oil affect theIrova economy positively. Referring to the "historical estimates", they point out that the decline in oil prices by 30% promises additional growth of world GDP in the medium term by about 0.5%. First among the listed winning the world economy.

10% change in oil prices is associated with a change of about 0.2% of global GDP, the IMF confirmed the employee Tom Hebling. The fall in prices is generally promotes the growth of GDP, as a result of moving resources from the seller to the consumer, who will be more willing to spend their profits, than, for example, the wealthy emirate, he explains. However, in the black, of course, will be oil-importing countries, such as China, while the producers of "black gold" will be in the camp of the losers. The impact of cheap oil on the US economy is mixed, because this country - at the same time the world's largest consumer and importer of oil producer. And the situation will largely depend on whether the test cheap prices slate industry survive. According to experts, the effect will be seen already in the I quarter of the come rYes.

The authors of the World Bank report calling for oil-importing countries to use the current opportunity to strengthen "financial buffers", but concluded that the potential for fiscal stimulus is now about a third less than before the 2008 global financial crisis.

Cheap oil will help the world economy, but not as much as it was in the previous period of declining prices, warn analysts Goldman Sachs. According to their calculations, cheap oil, and low interest rates should add to economic growth in 2015 of about 0.1 percentage points. However, these indicators will be more than offset by the strong dollar, slower global growth and weaker equity markets, which are suffering losses due to the depreciation of the shares of oil companies. "At first, the markets will feel the negative effects of the depreciation of oil and only then the economy will benefit from this" - said the chief investment analyst at BlackRock Inc Ewen Cameron Watt.

Accelerating growth in the world's largest consumer market - the United States - along with low inflation and almost well,evymi rates by the Federal Reserve System (FRS) in the long term should lead to a revival of commodity markets, said the director of analytical department of "Alpari" Alexander Razuvaev. "In particular this applies to oil and industrial metals and metal products, the prices of which the last six months under strong pressure. As for the precious metals segment, we are quite likely to see forward-looking in comparison with the rate of gold platinum and palladium price growth, "- he predicts.

However, continuing to grow stronger in anticipation of the growth rates of the dollar does not signal an immediate reversal in commodity markets: global investors still prefer US equities, notes analyst. "S & P500 index is still near all-time highs after nearly three recoilless growth. Despite the fact that the picture of the last two months shows that the big players are not entirely sure of the continuation of this remarkable trend.

In the case of steady maintenance indicator is lower than 2 thousand points, you can expect that all shareholders of US companiesMore will be set to fix the accumulated profits and invest the money somewhere else. Some of them will undoubtedly be in US debt securities and other assets of fixed income. At the same time depreciating raw materials also looks very attractive. How, by the way, and the company's emerging markets, of which special attention should be paid to the sector M & M », - adds Alexander Razuvaev.

As for Russia, as declared by Economic Development Minister Alexei Ulyukayev, the federal budget deficit at an oil price of $ 60 per barrel could reach in 2015, 2 trillion rubles. Which lost half the oil, as well as western sanctions and currency crisis, of course, hit the Russian economy in 2014. However, the West vainly expects that the oil crisis put Russia on its knees, the analyst Paul Pillar. Falling oil prices will force the largest exporters to make diplomatic concessions to Washington, he writes in The National Interest journal. According to the expert, the West betrayed nothing of euphoria and hopes that the oil crisis will make the leaders of countries such as Russia, Iran and Venezuela are more accommodating. To confirm his words leads Pillar heightkazyvanie Russian Foreign Minister Sergey Lavrov: "We find ourselves in a much worse situation in our history, and each time we overcome these difficulties, we become much stronger. It happened at this time. " "Economic pressure on the government in order to break it and send in the right direction is useless if you do not take into account any concessions in general can go mode, and what prospects it will receive in the event of submission. If, however, the prospects for improvement are not encouraging, and the desire to "bend" the state will not be "- sums up Paul Pillar.

In this well-known investor George Soros in an interview with the Financial Times said yesterday that the EU sanctions against Russia because of the drop in oil prices will have much more serious consequences than expected by Western leaders. He added that "not be surprised" if Russia defaulted happen. But Soros also said that the sanctions have a negative impact on the EU economy. According to him, the Russian default can be very hit European banks, and the financial crisis in our country is for Europe "torategicheskuyu and economic threat. "

Mutual Russian and Western sanctions reinforce fears that the European economy will fall into recession, or will experience lost decades, comparable with the recession conditions in Japan, which has made the Asian giant's economy fragile, bloodless, and reduced its global influence, economists warned. Thus, the former professor of the Wharton School of Business, University of Pennsylvania, John M. Mason argued in an article in The Washington Times, that Europe may have been too weak economically to go to war with Russia sanctions. And since the EU - the largest trading partner of America, the resumption of a recession in Europe almost certainly will reduce the growth of the US economy.