Some of America’s biggest shale producers are beginning to ratchet back oil and gas production for the first time in years, bending to the reality that a global glut will keep prices depressed.
The production cuts, announced as shale companies reported dismal earnings in recent days, stand in stark contrast to the past year, when many U.S. drillers kept the taps turned on even as oil prices plunged from nearly $100 a barrel to about $30. American oil CLJ6, +1.96% satisfies 10% of the world’s daily needs, putting U.S. production on par with output from Russia and Saudi Arabia.
The Organization of the Petroleum Exporting Countries continues to at pump full tilt, further pressuring higher-cost operators such as U.S. shale producers. Last week, Saudi Arabia oil minister Ali al-Naimi bluntly told a roomful of energy executives in Houston that the supply problem will only be resolved when low prices force companies to stop producing the oil that is most expensive to extract and sell.