U.S. Shale Companies Are Turning the Oil Taps Back On

American oil producers are reopening the spigots, complicating the crude market’s recovery. Scores of shale drilling companies turned off wells to reduce output when U.S. oil prices fell to negative territory in late April, after millions world-wide stopped driving and flying due to the new coronavirus, causing a steep drop in global demand. Now that more of the world is reopening and prices are rebounding to nearly $40 a barrel, companies including Parsley Energy Inc. PE 8.33% and WPX Energy Inc. WPX 13.34% are starting to turn some of those wells back on, even as they continue to put off most new drilling. The increased volumes remain far below peak levels before the pandemic, when the U.S. was pumping more than 13 million barrels a day of crude, the most in the world. But the oil market remains fragile, and many of the world’s other top producers are still voluntarily curtailing their output to help rebalance supply and demand. The Organization of the Petroleum Exporting Countries and its allies, which agreed in April to limit production by 9.7 million barrels a day through June, struck another deal Saturday to extend cuts another month. The extension aims to reduce output by 9.6 million barrels a day, as Mexico isn’t going to continue its production curbs. Libya, which is exempt from the quotas, also said over the weekend that it is restarting some 300,000 barrels a day of production, another challenge for global rebalancing. OPEC delegates were briefed on the likelihood that U.S. producers would turn the taps back on last week but also discussed forecasts that American production would likely decline later in the year before agreeing to extend output cuts. While turning existing wells back on is likely to temporarily boost U.S. production this summer, American oil output is still widely expected to drop in 2020. That is because shale wells lose steam quickly, and companies have sharply cut back on the number of new wells they are drilling...WSJ