Home / Business / Oil jumps as much as five percent from five-year low; focus on shale
A new oil well head waits to be fracked at a Hess site near Williston, North Dakota November 12, 2014. REUTERS/Andrew Cullen

Oil jumps as much as five percent from five-year low; focus on shale

NEW YORK – Crude oil markets jumped as much as 5 percent on Monday, rebounding from five-year lows with their biggest daily gain since 2012, on fears that the high U.S. shale output blamed for the global oil glut may be shrinking.

A weaker dollar <.DXY>, which makes commodities denominated in the greenback more affordable to holders of other currencies, also fueled buying in oil and other natural resource markets, traders said. [FRX/]

Benchmark Brent crude oil <LCOc1> settled up $2.39 at $72.54 a barrel, after a session peak at $72.73. It fell as much as $2.62 earlier to $67.53, a low since July 2009. The 3 percent gain on the day was Brent’s largest since October 2012.

U.S. crude <CLc1> finished up $2.85 at $69 a barrel, after initially plumbing a five-year bottom at $63.72. The 4 percent rise was the largest one-day move up in U.S. crude since August 2012. U.S. crude continued to surge post-settlement, gaining almost 5 percent to $69.34 by 2015 GMT.

“The market clearly got a little overdone to the downside and now it’s coming back up, proof that there will be a response from the shale patch to these low prices,” said John Kilduff, partner at energy hedge fund Again Capital in New York. “Several shale companies are already reporting capital expenditure reductions next year as their profit margins get thinned out.”

On Wall Street, shares of shale energy companies such as Denbury Resources <DNR.N> and Newfield Exploration <NFX.N> took a beating for a second straight session, down about 5 percent each in late afternoon trade.

Data reviewed by Reuters on Monday showed the new low-price environment for oil might have started affecting U.S. shale production, with a 15 percent drop in permits issued for new shale wells in October.

In related news, Iraq says failing oil prices force rethink of 2015 budget.

“The market is still looking for a new equilibrium below $70, which is a little surprising given that with the current prices, much of the shale oil production in the U.S., or part of it, will be unprofitable,” Commerzbank analyst Eugen Weinberg said.

A Reuters Breakingviews column noted that shale output may not fall as quickly as thought as producers “have ways to keep the oil flowing, including diverting investment to more productive fields and stepping up efforts to cut already rapidly falling costs”.

Brent and U.S. crude prices have fallen for five months in a row, the longest losing streak in oil since the 2008 financial crisis. Despite Monday’s rebound, they are still down about 10 percent from the start of last week, before producer group OPEC decided on Thursday not to cut output despite oversupply worries.

Saudi Arabia, the most influential member of the Organization of the Petroleum Exporting Countries, blocked moves by some smaller producers to curb output, arguing that low prices would ultimately hurt U.S. shale oil.

 

(Additional reporting by Ron Bousso and Ahmed Aboulene in London and Florence Tan in Singapore; Editing by Chris Reese, Jessica Resnick-Ault, Meredith Mazzilli, David Goodman, William Hardy and David Clarke)

31 comments

  1. Their stacking rigs mow in or area ,

  2. Eventually the milk shake is empty. Why is that so hard to understand?

  3. So…no more boys being brought to the yard? Is that what you’re saying Bryan?

  4. Save your money now because this booms over

  5. You can pump all you want, deflation is still coming and there’s nothing that will stop it.

  6. If the booms over now sounds like you should have been saving a long time ago. Pretty dumb time to start saving money

  7. This is all a result of OPEC. They are trying to destroy american oil

  8. Sound like none of y’all work in production. The boom is not over.

  9. Russia and Venezuala economy’s are over a barrel, so to speak. US dollar is on a roll. Saudi Arabia is still pumping, continued downward pressure on world oil prices. Looks like lower gas prices for US consumers in 2015.

  10. Greedy?! A man works and he’s greedy? C’mon man!!

  11. My kids eat with money from oil and gas. I like lower gas prices, but higher prices mean more exploration, and more exploration means more work. So frac on baby!!

  12. The apartments and housing costs.

  13. There’s a trillion barrels under green river…

  14. This boom is no where near over cause it’s not a boom anymore it is a industry now because more and more states are starting to drill for shale oil eventually we will be independent from OPEC nations

  15. I think it’s funny all of the people posting that don’t even live here in North Dakota….. Listen up you, the “boom” isn’t a boom this happened before in our state and never went away, just in case your not familiar with the formations up here the “Bakken” is a very small portion of another shale we haven’t even tapped yet so for all of you “folks” who have no
    Clue what your talking about go back to your welfare payed way and shut the hell up! The reason you have shoes on your feet and tires on your vehicle you got for free is because of oil drilled in all shales not just the Three Forks Formation……

  16. Great to see a Big Red truck in the back ground. (H)

  17. Apparently you can’t post true feelings on here, Bakken.co = no freedom of speech…..

  18. Glad I’m drilling for natural gas!

  19. And thats what its all about William Rupert….dominating

  20. Amazingly he works for an oil company.

  21. I guess ya’ll are retarded and can’t bother to read.

  22. Tim,
    So are all the people who come to North Dakota to work also a bunch of greedy “$%#$#”? I mean when it all comes down to it everyone wants more Benjamins.

    Try to hire a carpenter to build that house and see what he wants to be paid.

  23. Apparently everyone that reads this is. I was speaking of the COL and the mass apartments/housing.

    Bunch of derpy bottom feeders keep replying. Lol

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