Oil price gift boosts US shale

Further production cuts led by Saudi Arabia could signal the start of a US oil sector recovery, but potential headwinds remain

Saudi Arabia’s decision to withhold another 1mn bl/d from the market may transform what looked set to be another bleak year for US shale into an opportunity to return barrels and boost spending. This would be welcome relief for a sector that racked up the most bankruptcies last year since the crash of 2016. Most onshore US shale producers need a WTI price of more than $50/bl to make drilling and completing wells economically viable again. For most of 2020, the depressed oil price environment encouraged firms to keep output flat by drawing from their drilled-but-uncompleted (Duc) well backlog rather than putting capex into new bores.  But WTI has now risen above $50/bl for the first time sinc