World Leaders Reach Unprecedented Oil Production Deal
World Leaders Reach Oil Production Deal According to an article recently published by the New York Times, the United States, Saudi Arabia and Russia have reached an unprecedented deal in an effort to stabilize the financial markets. The deal involves reducing oil output by 9.7 barrels per day. In 2019, the United States consumed an average of about 20.46 million barrels of petroleum per day. Even though a historic deal has been reached, LiveMent notes that ' it may not be enough to halt price wars between Saudi Arabia and Russia and has little impact on the oil surplus that continues to grow as the virus lockdown takes millions of drivers off the road.' The deal seems to have had somewhat of a positive impact on West Texas Intermediate crude that went up +9 on Monday from $22, but in order for shale producers to make a profit, barrels need to be above $40 consistently. The companies closest to the oil wells are in the most trouble. West Texas Intermediate crude futures fell below $22 again on April 9, and haven't been above $40 per barrel since March 6. Many U.S. shale producers need oil to be consistently above $40 per barrel just to cover production costs; when you start adding in debt servicing and corporate expenses, producers are bleeding to death in an environment when there's nobody to give them an infusion.