Oil and Gas News

Oil sees continued surge

Oil has recorded a fourth continued day of rises, finishing well above US$50 per barrel.

The turnaround in price is a massive boost of confidence in the commodity, following earlier predictions it may fall as low as US$25 per barrel as the price began to sink into the low US$40s per barrel mark.

The oil price has now begun to rally after months of falls, with prices rising close to 20 per cent to sit at US$53 per barrel as of yesterday.

The rally comes on the back of news drillers actively shutting down operations and making rig non-operational in the wake of lowered prices, and is coupled with a fall in the Australian dollar.

The decision to shut rigs comes as little surprise for the industry.

According to Baker Hughes the average oil rig countis expected to fall around 15 per cent in the first quarter of 2015, compared to the last quarter of 2014, as operators look to focus on their highest performing wells instead of those with lower output.

But even with this, rig costs still remain high, with an average daily rate for floating drillships ranging between US$257,000 to US$520,000, while semi-submersible rates range between US$288,000 through to US$441,000.

These high production costs have seen majors such as BP record large quarterly losses, with the company announcing a US$4.4 billion loss this week.

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