U.S. oil companies are pulling back as lower commodity prices take a toll.
After two months of crude oil prices hovering around $60 a barrel, companies are shutting down drilling rigs and laying off workers as they pare spending. It now appears very likely that U.S. oil production will not grow much this year, if at all.
There are two main reasons for low oil prices. President Trump’s trade war is likely to slow the global economy, hurting demand for fuel. And OPEC Plus, an oil cartel led by Saudi Arabia, is increasing production of oil as demand is softening.
On Saturday, eight members of the cartel are widely expected to announce plans to bring even more oil to market this summer, which could send prices lower still.
American oil companies are not waiting to find out.
While the oil giants Exxon Mobil and Chevron are maintaining their spending plans, smaller companies are pulling back. Those focused on drilling for oil now plan to spend around 3.5 percent less this year than previously planned, according to a BloombergNEF analysis of a dozen publicly traded companies. All things equal, more drilling tends to drive oil prices down and less drilling generally props them up.
“We can’t run our program on hope,” Tom Jorden, chief executive of the oil and gas producer Coterra Energy, told analysts during an earnings call this month. “So we are battening down the hatches, expecting this to last for a while.”
The Houston-based company said it would drill less in the Permian Basin of Texas and New Mexico, the top U.S. oil field, and more in the Northeast, which is rich in natural gas. Prices for that fuel, used in power plants and for heating, have been much more resilient.
Lower oil production is the opposite of what Mr. Trump promised during his campaign, which frequently repeated the chant “drill, baby, drill.”
The pullback means that production in U.S. shale basins, which generate most of the country’s oil, is likely to start declining later this year, according to the International Energy Agency, a Paris-based organization of industrialized countries including the United States.
The contraction could be swift if oil falls under $60 a barrel and remains there. For every dollar below that threshold, the I.E.A. estimates around five drilling rigs could be pulled out of U.S. fields. When companies drop rigs, workers often lose their jobs, hurting the economy of states like Texas.
Diamondback Energy, one of the Permian’s largest oil producers, said that the heart of the U.S. oil industry already hit peak production. The country pumps more than 13 million barrels of oil each day, making it the world’s biggest oil producer.
“It is likely that U.S. onshore oil production has peaked and will begin to decline this quarter,” Travis Stice, who until recently was chief executive of Diamondback, wrote in a May 5 letter to shareholders. “To use a driving analogy, we are taking our foot off the accelerator as we approach a red light.”
Diamondback cut its annual spending forecast by 10 percent.
Oil prices have been volatile in recent months, falling as the United States and its trading partners have raised tariffs, then recovering just as quickly on any hint of a pause in trade hostilities.
Late Wednesday, for example, prices climbed toward $63 a barrel after the U.S. Court of International Trade blocked Mr. Trump from putting in place some of his highest tariffs. They retreated on Thursday, the same day a federal court temporarily paused that ruling, allowing the tariffs to remain in place for now.
What has remained consistent is that oil fetches much less than it did before Mr. Trump took office, when it was close to $80 a barrel. Then, most U.S. producers were earning healthy profits.
Even companies that are optimistic oil prices will rise in the long-term are bracing for them to remain lower for the foreseeable future.
“Most of us have a long-term view that oil prices over time are going to recover, probably not at the level we want this year or next year, but there’s going to come a time,” Vicki Hollub, chief executive of the large oil producer Occidental Petroleum, told analysts this month.
Rebecca F. Elliott covers energy for The Times with a focus on how the industry is changing in the push to curb climate-warming emissions.
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