Six US oil firms expected to shut 300,000 barrels per day of production in May and June
hit negative $40 per barrel as storage space disappeared and producers were literally paying buyers to take the oil off their hands. WTI's price is currently down more than 75% year-to-date.
Why would an investor risk capital in an industry saddled with debt where the main product can go below breakeven costs for long periods of time?warning of a repeat meltdown for WTI's June futures contract, as storage space is expected to run out within weeks. With no certainty as to when demand will return and lockdowns will subside, the EIA expects U.S. oil output to be down to 11 million bpd by 2021. S&P Global Platts predicted in early April a more than 50% fall in rigs with proportional job losses.
And with production costs much higher than most of its global competitors, the EIA actually expects the U.S. to "return to being a net importer of crude oil and petroleum products in the third quarter of 2020."is cutting its capital spending globally by 30%. In U.S. shale, the oil major recently had 58 rigs in operation in Texas's shale-rich Permian basin — that number is likely to fall to 15, according to analysts at Houston-based investment bank Tudor, Pickering, Holt & Co.
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