Oil’s Rally Encourages U.S. Shale and Complicates Task for OPEC+ - Bloomberg

Oil Prices for June 2, 2020: Brent Crude, WTI - Bloomberg:

PRICES:
West Texas Intermediate for July delivery rose 2% to $36.15 a barrel as of 10:17 a.m. in New York. Brent for August delivery climbed 2.1% to $39.13 a barrel.

As OPEC+ producers head toward a consensus on extending their output curbs, oil’s rally is prompting some U.S. producers to open their taps once again. 

With U.S. futures rising as much as 3% on Tuesday, resuming its record advance last month, concern is emerging that the increase will encourage more American shale output. That could undercut efforts by OPEC and allies such as Russia to cut supplies in a bid to shield the market from demand losses in the wake of the coronavirus crisis.

Further evidence of that threat emerged this week, when U.S. driller Parsley Energy Inc. said it’s turning oil wells back on just weeks after shutting them off, illustrating the shale industry’s agility in responding to rising crude prices. Meanwhile, Russia and several other OPEC+ nations are said to favor extending their current output cuts by a month.

“If everybody magically decides to turn the taps back on and lets the oil back to the surface, now you’ve got 1.5 million to 2 million barrels a day that needs to find a home,” said Stewart Glickman, an energy analyst at CFRA Research.