A couple of prominent shale producers said that oil at around $30 might be enough to revive shale activity.
Diamondback Energy Inc is going to curtail production by 10% to 15% this month. Parsley Energy Inc. has curbed a quarter of its output. As the world runs out of places to store additional oil supply, producers from Exxon Mobil Corp. and Chevron Corp. are reducing their production.
WTI crude futures climbed 20% to settle at $24.34 a barrel. It is little more than its price two weeks before until WTI crude would face a precipitous collapse into negative territory. However, the prices remain more than 60% below $65.65 – the peak of this year reached in early January.
Phil Flynn, a senior market analyst at the Price Futures Group, thinks that the worst of oil demand destruction and production cuts are left behind.
The analyst referred to the 30 million barrels of oil removed from the market every day. Governments have taken non-essential travel restriction measures to curb the spread of the coronavirus. Besides, the agreement reached by the world’s largest oil producers to cut output took 20 million barrels of supply off the market each day.
US states are gradually reopening, and Europe is not far behind. Oil demand is on the rebound. Meanwhile, production cuts from the world’s largest producers of oil have just begun, stated Trump, the president of the US.
Travis Stice, Chief Executive Officer of Diamondback Energy, thinks that priority is to restart production that was shocked. The prices in the high twenties and low thirties signal going back to work, Stice said. Into this new world order, the industry is going to look different than what it has been.