$230B lost in week following OPEC meeting
Source: By Rakteem Katakey, Bloomberg/Fuel Fix • Posted: Tuesday, December 15, 2015
Oil companies’ value sank $230 billion over last week, following the Organization of the Petroleum Exporting Countries’ Dec. 4 decision to keep adding to the crude glut and eliminating its production cap.
The day before OPEC’s meeting, the combined market value of companies directly tied to drilling and refining oil products was $3.96 trillion. Last Friday, that value sat at $3.73 trillion.
“Companies must repeat the same size of cuts they’ve already announced to be able to cope with oil prices this low,” said Alexandre Andlauer, an oil industry analyst for AlphaValue SAS. He said he expects “further layoffs to come with oil at $40 a barrel.”
The United States’ second-largest oil company, Chevron Corp., said last week that its budget for next year is 24 percent lower than this year’s. Also last week, ConocoPhillips Co. announced that its capital spending will be reduced 25 percent. Claudio Descalzi, CEO of Eni SpA, estimated that industrywide cuts next year could reach $200 billion.
On Friday, the International Energy Agency released its monthly report stating that the oil glut will remain until at least late 2016.