At the height of the Coronavirus pandemic, many American oil producers had to survive, as commodity prices did not even cover the costs. The U.S. now faces a second wave of COVID-19, and hopes for industry recovery are fading.
The Bloomberg agency writes about it.
If the use of transport is again reduced, if the authorities introduce new quarantine restrictions, oil products will remain unclaimed in the U.S., the media explain. The situation is aggravated by the fact that the center of the deadly virus has become the state of Texas, and work in the fields may be suspended.
The April deal to reduce production of raw materials within the framework of OPEC+ allowed putting an end to the oil war and stabilizing the overvalued demand in the market with extremely low supply. However, as previously reported by News Front, the United States has already begun to increase production, which raises doubts about continued compliance with the OPEC+ agreement. As a result, of course, the parties to the deal, represented by Russia and Saudi Arabia, may ask themselves an inconvenient question for the United States.
The fact is that the current cost of WTI oil, although not high enough to start drilling new wells, may encourage companies to continue working on existing wells.
“What happens next may depend on the epidemic in the United States”, – writes Bloomberg. – “It could happen that the sharp rise in disease in the southern states will prevent people from traveling to holidays when gasoline consumption seemed to be starting to rise. The combination of weak demand and rising supply may again put pressure on oil prices and raise questions within OPEC+ about why the group is supporting prices in favor of American oil companies.”