By:Lynn Doan and Dan Murtaugh
For the first time in almost seven months, America’s shale drillers put rigs in oil fields back to work, and they’re doing it at a lower price.
The last time they added rigs, crude futures were trading near $70 a barrel. Now, even after a rebound, they’re under $60. And yet drilling rigs rose in almost every major U.S. oil basin in the country this week, raising the total by 12, according to field-services company Baker Hughes Inc.
The sudden rebound is a testament to how resilient U.S. shale has become in the battle for global market share. Spurred by last year’s collapse in prices, shale explorers have brought down their break-even costs by $15 to $20 a barrel, a Bloomberg New Energy Finance analysis shows.
“As much as anything else, the rise this week is a testament to break-evens coming down just over the course of this year,” James Williams, president of energy consultancy WTRG Economics, said by phone from London, Arkansas, on Friday. “Shale is a lot more resilient than we thought it was, and it means we’re going to be able to keep producing shale oil at a lower cost than we thought we could.”
While U.S. benchmark West Texas Intermediate oil has gained about 6.9 percent this year, it’s still down 46 percent from a year earlier. Futures for August delivery lost 20 cents to $56.73 a barrel in electronic trading on the New York Mercantile Exchange at 12:06 p.m. Singapore time on Friday.