American oil executives will sleep a bit better tonight after Saudi Arabia signaled it’s coming to the rescue of the battered crude market.
Saudi Arabia announced plans on Sunday to cut shipments by half a million barrels per day in December. And the kingdom threw its weight behind OPEC and its allies reducing supply further next year.
It’s a big reversal. Just months ago Saudi Arabia, under pressure from President Donald Trump, was opening up the taps in a bid to prevent $100 oil.
Saudi Arabia’s 180 is good news for US shale companies, especially high-debt frackers that are sensitive to price swings. It signals that the world’s largest oil exporter won’t stand for crude crashing any further.
“If you are a producer in Texas, you have to be happy with the fact that there is a swing supplier in the market that wants to keep prices supported,” said Matt Smith, director of commodity research at ClipperData.
Fears about oversupply sent US oil prices plunging into a bear market last week. Those concerns were driven in part by developments in the United States.
First, US shale companies ramped up production faster than anyone anticipated. US output topped 11 million barrels per day in August for the first time ever.
Second, the Trump administration