Shale producers eye comeback with oil @ $50 sweet spot

Global oil prices slipped more than 1 per cent from above $50 to below that psychological mark as US drillers reopened some oil rigs last week – only the second time they’ve done so this year.

According to Baker Hughes data, US added 9 oil rigs last week, taking the number of active oil rigs in the country to 325 from 316 in the previous week.

While the number still remains almost half of what it stood a year earlier (642 oil rigs in the US), it does suggest that the current oil prices are encouraging for shale oil producers to remain in business.

On Friday, US West Texas Intermediary (WTI) oil prices slipped 1.12 per cent to settle at $48.62/barrel while Brent crude was down 0.8 per cent to $48.62/b at the close of the trading week.

Oil prices have surged almost 100 per cent from their 13-year-lows around $26/b in late January this year.

Prices are being buoyed by a growing demand thanks to a reasonably recovering US economy while supply has been restrained due to an increasing number of US and Canadian oil rigs downing shutters.

In addition, oil prices recovered rapidly from their 13-year-lows on the back of supply disruptions in several producing countries, including Nigeria, Venezuela, Libya and Canada.

However, weaker-than-expected US non-farm payroll data over the weekend along with an Opec meeting not announcing plans to curtail production saw prices under pressure. The latest decline in oil prices was the first in about four weeks.

Several analysts see oil price range between the $50 and 60 per barrel mark as a sweet spot for the global economy. While it doesn’t hurt retail consumers at the pump or the industry, it also offering relief to oil producing countries.

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