Big oil, petrostates adapt to era of cheap oil
With prices plunging below US$50, without signs of recovery, they have no choice
Oil prices edged lower on Monday, with some analysts saying it could drop into the US$30s before selling stops. WTI crude futures are 20% off their January high.
But the Wall Street Journal writes this week that the oil industry is coming to terms with a new equilibrium after an extension of OPEC cuts failed to hold prices up.
US shale producers have led the way adapting to prices in the ballpark of US$50 a barrel, where they say they can break even, according to oil-and-gas data firm Rystad Energy. Several companies can reportedly make money at US$40 a barrel.
Some have even welcome the new normal price range.
“For oil, $50 to $60 is a sweet spot both for consumers and for producers,” Rob Thummel, energy asset manager at Tortoise Capital Advisors, was quoted by the WSJ as saying.