Guar gum industry will benefit from competitive crude oil prices.

Guar is making good impact in commodity market. Guar is only commodity which was having lower entry point for long term investment. Investors must keep stuck their position because up to next two and half month there is no delivery pressure. In this two and half month period Guar will attract a number of investors. Fundamentally guar is very strong Existing stock is very tight and processing industries don’t have any major in house stock. Now this guar gum demand will reach in market and stockist and traders will react bullish to these fresh demands.

Demand will increase as OPEC is struggling to stand in crude oil market which is shifting to shale and tight oil production. IN USA there is different situation. Companies are closing the old oil rigs and marginal production in negative and companies are going for new oil drilling and oil rigs to increase their marginal production and profit. Companies find New oil well profitable instead of recharge the oil well in this hyper competition.

There is good news that break even prices of companies is coming down. In year 2013 the average break even price was 80USD/Barrel it came down USD70/barrel in year 2014, Which further came down to  USD50/barrel right now it has come down to USD 40/barel and It is going down with latest technology.

For example; In Permian Region of USA, oil production from per rig was 100 barrel /Day in 2012 and it is keep increasing with fracking. In 2013 it was 125barrels/Day, in 2014 it was 180barrels/Day, in 2015 it was 200Barrels/Day, in starting of 2016 it was 425 Barrels/day. Right now it is around 500 barrels /Day. This is very good improvement especially in last two years. Companies are focusing in going for new rigs to increase their marginal production and profitability. Demand of Guar will increase with this movement. Companies will go for new oil rigs to increase their profitability.

Investors can maintain their existing position and they can also make fresh investment at this level and there are more chances of better return in Guar in coming period. Guar seed is more stable and solid commodity then guar gum. There is less impact of daily inputs .

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