CULVER CITY, CA - APRIL 25:  Oil rigs extract petroleum as the price of crude oil rises to nearly $120 per barrel, prompting oil companies to reopen numerous wells across the nation that were considered tapped out and unprofitable decades ago when oil sold for one-fifth the price or less, on April 25, 2008 in the Los Angeles area community of Culver City, California. Many of the old unprofitable wells, known as "stripper wells", are located in urban areas where home owners are often outraged by the noise, smell, and possible environmental hazards associated with living so close to renewed oil drilling. Since homeowners usually do not own the mineral rights under their land, oil firms can drill at an angle to go under homes regardless of the desires of residents. Using expensive new technology and drilling techniques, California producers have reversed a long decline of about 5 percent annually with an increased crude flow of about 2 1/2 million barrels in 2007 for the first time in years.
David McNew/Getty Images
CULVER CITY, CA - APRIL 25: Oil rigs extract petroleum as the price of crude oil rises to nearly $120 per barrel, prompting oil companies to reopen numerous wells across the nation that were considered tapped out and unprofitable decades ago when oil sold for one-fifth the price or less, on April 25, 2008 in the Los Angeles area community of Culver City, California. Many of the old unprofitable wells, known as "stripper wells", are located in urban areas where home owners are often outraged by the noise, smell, and possible environmental hazards associated with living so close to renewed oil drilling. Since homeowners usually do not own the mineral rights under their land, oil firms can drill at an angle to go under homes regardless of the desires of residents. Using expensive new technology and drilling techniques, California producers have reversed a long decline of about 5 percent annually with an increased crude flow of about 2 1/2 million barrels in 2007 for the first time in years.
Now playing
02:18
Why oil prices are falling
Now playing
02:20
IMAX CEO: Box office sales in Asia bode well for US theaters
CNN
Now playing
05:16
WTF is a SPAC?
CEO at Verizon Media K. Guru Gowrappan appears at the 2019 Verizon Media NewFront on April 30, 2019 in New York City.
Noam Galai/Getty Images for Verizon Media
CEO at Verizon Media K. Guru Gowrappan appears at the 2019 Verizon Media NewFront on April 30, 2019 in New York City.
Now playing
02:47
Verizon sells off Yahoo and AOL
Warren Buffett, CEO of Berkshire Hathaway, attends the 2019 annual shareholders meeting in Omaha, Nebraska, May 3, 2019. (Photo by Johannes EISELE / AFP)        (Photo credit should read JOHANNES EISELE/AFP via Getty Images)
Johannes Eisele/AFP/Getty Images
Warren Buffett, CEO of Berkshire Hathaway, attends the 2019 annual shareholders meeting in Omaha, Nebraska, May 3, 2019. (Photo by Johannes EISELE / AFP) (Photo credit should read JOHANNES EISELE/AFP via Getty Images)
Now playing
02:40
Warren Buffett warns on US inflation
Now playing
03:15
This TikTok influencer started a venture capital firm
An Amazon.com Inc. delivery driver carries boxes into a van outside of a distribution facility on February 2, 2021 in Hawthorne, California. Jeff Bezos said February 1, 2021, he would give up his role as chief executive of Amazon later this year as the tech and e-commerce giant reported a surge in profit and revenue in the holiday quarter. The announcement came as Amazon reported a blowout holiday quarter with profits more than doubling to $7.2 billion and revenue jumping 44 percent to $125.6 billion. (Photo by Patrick T. Fallon/AFP/Getty Images)
Patrick T. Fallon/AFP/Getty Images
An Amazon.com Inc. delivery driver carries boxes into a van outside of a distribution facility on February 2, 2021 in Hawthorne, California. Jeff Bezos said February 1, 2021, he would give up his role as chief executive of Amazon later this year as the tech and e-commerce giant reported a surge in profit and revenue in the holiday quarter. The announcement came as Amazon reported a blowout holiday quarter with profits more than doubling to $7.2 billion and revenue jumping 44 percent to $125.6 billion. (Photo by Patrick T. Fallon/AFP/Getty Images)
Now playing
02:02
Amazon's profits tripled in the first quarter
Now playing
02:03
El-Erian: Investors are taking excessive risks
This photograph taken on March 3, 2021 in Zurich shows a sign of Swiss banking giant UBS on their headquarters. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)
Fabrice Coffrini/AFP/Getty Images
This photograph taken on March 3, 2021 in Zurich shows a sign of Swiss banking giant UBS on their headquarters. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)
Now playing
02:45
Banks reveal huge losses from Archegos collapse
A Tesla car charges at a Tesla Supercharger station on April 26, 2021 in Corte Madera, California. Tesla will report first quarter earnings today after the closing bell. (Photo by Justin Sullivan/Getty Images)
Justin Sullivan/Getty Images
A Tesla car charges at a Tesla Supercharger station on April 26, 2021 in Corte Madera, California. Tesla will report first quarter earnings today after the closing bell. (Photo by Justin Sullivan/Getty Images)
Now playing
01:33
Bitcoin helps Tesla post record profits
Detail of a mans hand scrolling through Netflix on an Apple iPad Pro, taken on March 6, 2020. (Photo by Phil Barker/Future Publishing via Getty Images)
Future Publishing via Getty Imag
Detail of a mans hand scrolling through Netflix on an Apple iPad Pro, taken on March 6, 2020. (Photo by Phil Barker/Future Publishing via Getty Images)
Now playing
02:37
Netflix shares drop after subscribers miss
WASHINGTON, DC - DECEMBER 12: U.S. President Donald Trump departs on the South Lawn of the White House, on December 12, 2020 in Washington, DC. Trump is traveling to the Army versus Navy Football Game at the United States Military Academy in West Point, NY. (Photo by Al Drago/Getty Images)
Al Drago/Getty Images
WASHINGTON, DC - DECEMBER 12: U.S. President Donald Trump departs on the South Lawn of the White House, on December 12, 2020 in Washington, DC. Trump is traveling to the Army versus Navy Football Game at the United States Military Academy in West Point, NY. (Photo by Al Drago/Getty Images)
Now playing
02:18
Trump said electing Biden would crash the markets. It didn't
Now playing
04:42
Digital Artist Pak sells NFT art for $17 million at Sotheby's
Now playing
01:57
Don't worry, Bed Bath & Beyond coupons aren't going away
Now playing
05:18
Coinbase CFO: We're an on-ramp to the crypto economy
GrabBike riders wait for passengers outside a commuter train station in Jakarta on June 13, 2018. - Toyota said June 13 it was investing 1 billion USD in Asia ride-share company Grab, as the Japanese automaker looks to expand beyond its core business into the "mobility" sector. (Photo by GOH CHAI HIN / AFP)        (Photo credit should read GOH CHAI HIN/AFP via Getty Images)
Goh Chai Hin/AFP/Getty Images
GrabBike riders wait for passengers outside a commuter train station in Jakarta on June 13, 2018. - Toyota said June 13 it was investing 1 billion USD in Asia ride-share company Grab, as the Japanese automaker looks to expand beyond its core business into the "mobility" sector. (Photo by GOH CHAI HIN / AFP) (Photo credit should read GOH CHAI HIN/AFP via Getty Images)
Now playing
03:12
Grab is going public in $40 billion SPAC deal
(CNN Business) —  

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