Oil producers pledge to provide sidewalks and keep prices rising

Oil extends a steady recovery until 2021, helped by new signals that the world’s largest producers will not turn on the taps and flood the market.

U.S. crude futures recently surpassed $ 50 a barrel for the first time since February, the latest milestone in a rebound fueled by higher travel and economic activity following the easing of restrictions relating to coronaviruses. Production cuts by Saudi Arabia’s major suppliers to U.S. companies are increasing the progress, giving traders confidence that demand will exceed supply.

Prices have reached new highs since Saudi Arabia announced last week that it would unilaterally cut production in February under a deal struck by the Organization of the Petroleum Exporting Countries and its allies like Russia. . Supply restrictions have prompted belief that the cartel will remain flexible with production even if the pandemic worsens and harms demand.

U.S. shale producers also say they are in no rush to increase supply and instead plan to pay off debts and return money to shareholders. Taken together, the commitments should help the energy industry recover and underscore recognition among producers that the economic toll caused by the pandemic is far from over, investors and industry executives say. . This means that suppliers do not need to spend on additional production.

“I don’t think the world really needs oil right now, so there isn’t a big reason to grow,” said Richard Dealy, president and chief operating officer of Texas oil company Pioneer Natural. Resources Co. Despite the recent increase in oil prices, Pioneer still plans to cap oil production growth at zero at 5% in 2021.