At its low for the day Tuesday, WTI crude oil for February delivery traded at $29.93 before settling at $30.25. That’s the first time WTI crude has traded below $30 a barrel since 2003. Through the first seven trading days of 2016, crude prices have dropped 18%.
We’ve already noted today that the U.S. Energy Administration is forecasting an annual average per barrel price for WTI crude of just $38 a barrel in 2016 rising to $44 in 2017.
In November analysts at Rystad Energy said that the average U.S. cost to recover a barrel of oil was $36.20. At the time WTI was trading around $40 a barrel and Brent traded around $44. Today, the differential between WTI and Brent is less than 50 cents.
How can U.S. producers continue to pump crude if they are going to lose about $6 a barrel by doing so? The answer is that they can’t, at least not for any extended period of time because most of the smaller producers have already leveraged their reserves and will not be able finance any further losses unless they are willing and able to sell some assets.
Large producers like Exxon, Chevron, and ConocoPhillips may be in a slightly better position because their credit ratings are higher due to their larger reserves. But like anything else, that can’t last forever, especially if prices don’t come back up. The big guys, too, will see the value of their reserves drop as the price of crude slides.
The price of a barrel of WTI has moved up to around $30.40 in electronic trading Tuesday afternoon. That’s better than nothing, but not much.
Credit Card Companies Are Doing Something Nuts
Credit card companies are at war. The biggest issuers are handing out free rewards and benefits to win the best customers.
It’s possible to find cards paying unlimited 1.5%, 2%, and even more today. That’s free money for qualified borrowers, and the type of thing that would be crazy to pass up. Those rewards can add up to thousands of dollars every year in free money, and include other benefits as well.
We’ve assembled some of the best credit cards for users today. Don’t miss these offers because they won’t be this good forever.
Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.