Drillers holding fire

Unless oil prices surge, drilling activity will remain subdued next year. Any increase will breed cost inflation

The exploration and production sector begins 2018 after relative calm in 2017. The resolve of Opec has been matched by the resilience of American shale, leaving oil prices within a band of $40-60 a barrel. The lower end of this band is uncomfortable but survivable. The higher end isn't quite enough to stimulate a leap in capital investment. American tight oil output increased in 2017, but investors are showing signs of fatigue—the industry continues to need external funding and average equity values have lagged the oil price by 20 percentage points since 2014. So in 2018, shale producers may at last start focussing on generating cash over growing production. There are signs that technology i