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US Oil Output Could Drop 20% on Shale Retreat Amid Mass Layoffs

Gasoil News - Published on Mon, 23 Mar 2020

Image Source: US Oil Production Coronavirus COVID-19
Bloomberg reported that America’s oil output could drop nearly 20% as shale drillers slash capital spending and reduce activity after the biggest crash in crude prices since 1991. Pioneer Natural Resources Co Chief Executive Officer Scott Sheffield in an interview on Bloomberg TV said “The US may lose between 2 million and 2.5 million barrels a day by the end of 2021 if oil prices stay around current levels as companies go into maintenance mode. Most shale producers will be forced to cut as many as half of their drilling rigs by the end of this year, when current hedges expire. The oil-price collapse may end up wiping out enough companies and production globally that it could create a shortage of crude, leading to higher prices after 2022. It’s going to be hard to ramp up production anywhere in the world, so we could have a two- or three-year super cycle between USD 60 and USD 100 oil at that point in time.”

One of the most painful busts in the history of crude oil happened just six years ago when a sharp price drop cost 200,000 roughnecks, almost half the entire workforce, their jobs. And now, the spread of the coronavirus coupled with an oil-price war between Russia and Saudi Arabia threatens to devastate the oil services industry and its workers once again. Tens of thousands of Texans are being laid off across the state in places like the Permian Basin shale fields in west Texas as companies shut down their drilling rigs. Announcements are starting to trickle in.

The cutbacks follow a precipitous drop in the price of West Texas Intermediate, the US benchmark crude, falling to as low as USD 20.06 last week from USD 52.05 just one month ago.

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Posted By : Yogender Pancholi on Mon, 23 Mar 2020
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