US Shale Industry Rides Out Oil Price Dip on Strong Demand

The US shale industry appears to be resilient in the face of declining oil prices. Despite crude dropping by nearly 30% since the war in Iran, long-dated prices remain high enough to support drilling for years. According to Rebecca Babin, an energy-focused senior equity trader for CIBC Private Wealth, such prices are still 'pretty enticing' to US producers.

Buyers are seeking alternatives to Middle East barrels due to geopolitical risks. As a result, demand for US crude has soared since the war in Iran began, with exports reaching a record high. Companies like Exxon Mobil Corp., Continental Resources Inc., and Matador Resources Co. are looking to increase production this year.

The Federal Reserve Bank of Dallas notes that futures are pricing crude for delivery through 2029 at $66 a barrel or more, which is the average needed to profitably drill a well. This suggests that US shale operators can afford to look past the temporary wartime spike in oil prices.