Producers with operations in the Eagle Ford Sale are continuing to struggle as crude prices hit a six year.
Related: EIA: U.S. Oil Production Has Peaked
On Tuesday China made the move to devalue its currency, sending shockwaves around the globe and contributing to U.S. crude oil falling to its lowest levels in six years.
The federal Energy Information Administration (EIA) announced in its monthly Short-Term Energy Outlook that it had lowered its 2016 forecast price for U.S. benchmark oil (Brent) by $8 to $54 per barrel in 2016 and its 2015 forecast by $6 to $49 per barrel. The agency said it expects Brent to average about $59 per barrel in 2016 and about $54 per barrel in 2015.
“The recent price declines reflect concerns about lower economic growth in emerging markets, expectations of higher oil exports from Iran, and continuing actual and expected growth in global inventories.”
As second quarter results come in from Eagle Ford producers, they reflect companies that are struggling with the current pricing environment.
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As tough as things have been, the worst may be still around the corner. If prices remain this low, the financial squeeze will get tougher for companies as we move into the fall months.
“Three months at $40 would shake people out pretty good. Everyone is a bit numb and fatigued.”
Last month. the The EIA announced that U.S. oil production had peaked in April as it hit 9.7 million barrels per day the highest level since 1971.