Saturday, December 26, 2015

Oil company bankruptcies reach new record

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At least nine U.S. oil and gas companies that accounted for more than $2 billion in debt have filed for bankruptcy in the fourth quarter, the bank said Wednesday in its energy economic update for the final three months of the year.

"Lower oil prices have taken a significant financial toll on U.S. oil and gas producers, in part because many face higher costs of production than their international counterparts do," according to the note written by Navi Dhaliwal, a research assistant, and Martin Stuermer, a research economist. "If bankruptcies continue at this rate, more may follow in 2016."

This is how we get to a bottom in oil prices. As the over indebted and marginal producers go bankrupt the herd is thinned and the stage is set for the next rise in oil prices.

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