When US oil futures plunged below zero in April the country’s shale industry was knocked sideways. More than 100,000 US energy jobs have disappeared since the pandemic began and rig counts fell by 73% in the year to 17 July. A dearth of supply helped Brent crude rally by 120% since the April low. Trading above $43 a barrel this week, oil is still down by 33% this year.
US oil output bottomed out in the second week of June, say Derek Brower and Myles McCormick in the Financial Times, but better prices are now encouraging higher output, with US production up “by 1.2 million barrels a day over the past six weeks”. As Alexandre Ramos-Peon of Rystad Energy puts it: “It’s a slow, slow recovery, but it’s happening”.
America is not the only producer to be boosting supply. A recent deal by oil exporters’ cartel Opec and Russia will see supply curbs gradually eased from August. Saudi Arabia is frustrated that its allies are not honouring promised production cuts, says Jason Tuvey of Capital Economics. During recent negotiations, Riyadh reportedly threatened a repeat of the “price war” that tanked oil prices this spring. As prices recover the incentives for governments to cheat on their quota will only grow, and Saudi Arabia’s willingness to curb its own production in order to support prices will fall. This year’s “oil price war” may be over, but it could prove “a sign of things to come”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
8 of the best properties for sale with indoor swimming poolsThe best properties for sale with indoor swimming pools – from an award-winning contemporary house in East Sussex, to a converted barn in Hampshire
-
Chinese stocks slump on first trading day of 2025Chinese stocks suffered in the new year from their worst first day of trading since 2016, despite a state stimulus package
-
Why Wise could be worth a lot more than its share price impliesForeign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
-
Can The Gym Group pump up your portfolio?Gym Group was one of the best UK small-cap stocks in 2024 and will beef up your profits this New Year
-
MoneyWeek's five predictions for investors in 2025MoneyWeek's City columnist gazes into his crystal ball and sees five unexpected events in store for investors in 2025
-
How buy-and-build stocks deliver strong returnsBunzl, DCC and Diploma became successful through buy-and-build – rolling up dozens of unglamorous businesses. How does it work and what makes it successful?
-
Singapore Technologies Engineering shows strong growthSingapore Technologies Engineering offers diversification, improving profitability and income
-
Why undersea cables are under threat – and how to protect themUndersea cables power the internet and are vital to modern economies. They are now vulnerable
-
Warren Buffet invests in Domino’s – should you buy?What makes Domino's a compelling investment for Warren Buffet's Berkshire Hathaway, and should you buy the UK-listed takeaway pizza chain?
-
4Imprint makes a strong impression – should you buy?4Imprint, a specialist in marketing promotional products, is the leader in a fragmented field
