Trump Win and OPEC Deal Boost Shale Producers

U.S. shale producers are redeploying cash, rigs and workers, cautiously confident the energy sector has turned a corner after Donald Trump’s election victory and OPEC’s recent signal that it plans to curb production.

The downturn produced a leaner, more efficient U.S. shale industry that was forced to develop and quickly adapt new technology to compete with conventional oil supplies during a two-year period of depressed prices.

“You’re starting to see a little bit of light at the end of the tunnel,” Ryan Lance, chief executive of ConocoPhillips, the largest independent U.S. oil producer, said in an interview last week. “We’re beginning to put capital back to work, but we’re being cautious.”

Specifics of the deal by the Organization of the Petroleum Exporting Countries – especially what it means for each member – need to be finalized at a meeting later this month in Austria. But the tentative agreement indicated OPEC kingpin Saudi Arabia is keen to end a damaging two-year oil price war. That prodded U.S. producers to action. [nL8N1C42M9]

The U.S. oil drilling rig count has grown 6 percent since OPEC’s September accord, according to oilfield analytics firm NavPort, with additions across the country’s top shale fields including the Permian (7 percent) and the Bakken (17 percent).

Also, Trump’s victory is expected to bring to the White House an advocate for oil and gas drilling, who will slash regulations and encourage new energy industry development. [nL1N1DA35B]

via Reuters

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza