US Shale Producers Ride Out Oil Price Drop with Long-Dated Support
US shale producers are weathering the recent oil price drop due to long-dated prices that remain high enough to support drilling, even if spot prices retreat. This is according to Rebecca Babin, an energy-focused senior equity trader for CIBC Private Wealth, who stated that such prices are 'pretty enticing' to US producers.
The futures market suggests that producers can afford to look past the temporary wartime spike in oil prices, which had reached over $100 a barrel. Now, with oil trading at nearly 30% lower, long-dated crude prices remain high enough to support drilling for years. In fact, US shale operators can sell their production at more than $70 a barrel all the way through mid-2027, and futures are pricing crude for delivery through 2029 at $66 a barrel or more.
This is good news for US producers such as Exxon Mobil Corp., Continental Resources Inc., and Matador Resources Co., which are among those looking to increase production this year. While they haven't updated their plans in the days since the peace deal has become more concrete, industry observers are counting on demand for non-Gulf barrels to persist.