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FX.co ★ US oil companies cut spending

US oil companies cut spending

US oil companies cut spending

Since the start of the year, leading oil companies in the US have decreased spending twice. They have reduced their budgets by 40 percent on average. The companies lowered their spending plans by 70% last year. Now a 40% cut has followed. With oil prices at the level of $30 a barrel, US oil producers have changed a lot in their global oil market business, analysts at Topeka Capital Markets said. Experts at Tortoise Capital Advisors also said that the US oil industry has no room for maneuver. US oil companies have already made 80% of the cost reduction. "The capital cuts that the industry is making should result in ... a supply shock to the downside," analysts warned. According to the US Energy Information Administration, US crude oil production is seen to fall to 8.5 million barrels a day in November this year. Last week was also disappointing for US oil industry as the number of active US oil-drilling rigs edged down by 31. Even in case supply cuts lead to a rise in oil prices, this is not going to help as producers quickly spend cash and there is a big pressure on balance sheets, analysts at Wood Mackenzie said.

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