"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," Rebecca Elliott reports for The Wall Street Journal. "Now that more of the world is reopening and prices are rebounding to nearly $40 a barrel, companies including Parsley Energy Inc. and WPX Energy Inc. are starting to turn some of those wells back on, even as they continue to put off most new drilling."
Output is still "far below" pre-pandemic peaks, when the U.S. was the world's top producer of crude oil. "While turning existing wells back on is likely to temporarily boost U.S. production this summer, American oil output is still widely expected to drop in 2020," Elliott reports. "That is because shale wells lose steam quickly, and companies have sharply cut back on the number of new wells they are drilling." That will likely continue to hurt the nation's economy, according to analysts.
Global oil demand has increased, though it's still an estimated 13% below last year's levels. On Saturday, the Organization of Petroleum Exporting Countries agreed to extend production cuts for another month to bring prices up. "OPEC delegates were briefed on the likelihood that U.S. producers would turn the taps back on last week," Elliot reports, "but also discussed forecasts that American production would likely decline later in the year before agreeing to extend output cuts."