As oil approaches $40 a barrel, companies are bringing wells back online, even as the market continues to recover from the demand drop caused by the coronavirus
American oil producers are reopening the spigots, complicating the crude market’s recovery.
Scores of shale drilling companies turned off wells to reduce output when U.S. oil prices fell to negative territory in late April, after millions world-wide stopped driving and flying due to the new coronavirus, causing a steep drop in global demand.
Now that more of the world is reopening and prices are rebounding to nearly $40 a barrel, companies including Parsley Energy Inc. PE 8.37% and WPX Energy Inc. WPX 13.34% are starting to turn some of those wells back on, even as they continue to put off most new drilling.
The increased volumes remain far below peak levels before the pandemic, when the U.S. was pumping more than 13 million barrels a day of crude, the most in the world. But the oil market remains fragile, and many of the world’s other top producers are still voluntarily curtailing their output to help rebalance supply and demand.