Mario Gabelli’s Take on US Shale Oil
Mario Gabelli on US shale oil
Mario Gabelli said that he has been a great believer in US shale oil for the last 15 years. He said that America (SPY) (QQQ) has gained independence with the production of oil (USO) (UCO) and has a strategic reservoir.
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After the country started to produce shale oil (OIIL) (DBO) (SCO), it gradually reduced imports, which is helping its balance of payment. He also said that the country’s oil technology has been improving rapidly, which could lead to cheaper and more efficient production.
The US (IWM) is a significant consumer of various energy products such as the gasoline, crude oil, and natural gas (UNG). The improvement of shale oil production in the US is a great advantage for various oil exploration and integration companies. However, these oil and gas exploration companies have faced a huge industry downturn in recent years.
Fall in crude oil prices
Crude oil prices fell at the beginning of 2016. The slowdown in global (ACWI) growth and the fall in manufacturing activity in China (FXI) (YINN) were the primary factors in falling crude oil prices. Prices reached a low of $26.21 per barrel on February 11, 2016. The fall in crude oil prices hurt the profit margins of various oil production companies. Crude oil prices generally move higher when there is demand in the economy.
In the next part of this series, we’ll analyze Mario Gabelli’s view on Buffett’s recent position cut in IBM (IBM).