Rig counts have recently ticked higher and with credit and earnings issues improving for some U.S. shale drillers, those companies may seize the opportunity to exploit higher pricing in the near-term.
While OPEC is cutting back to alleviate price pressures, U.S. fracking companies could jump to capitalize on the windfall as crude oil prices jump back above $50 per barrel – according to some estimates, shale oil producers can get by with oil at just over $50 per barrel due to advancements in technology and drilling techniques that have helped cut down costs.
“Based on the Brent-WTI spread, the Commitment of Traders Report and the expected direction of interest rates, it is concluded that the price of oil is headed lower, meaning that the price of XOP should also go lower as well. The aggregate fundamentals of XOP are currently valuing oil exploration and development companies abnormally high,” according to Seeking Alpha.
The Direxion Daily S&P Oil & Gas Exploration & Production Bear Shares (NYSEArca: DRIP) takes the -3x, or -300%, daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index, the same index tracked by XOP.
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