Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list

Less than 4% of world oil supply in the red at $35/b: Wood Mac

Oil | Crude Oil

Shale shake-up: The IEA’s new oil forecasts and what they mean for the IOCs


Platts Market Data – Oil

NGL | Oil | Crude Oil | LPG | Oil Risk | Petrochemicals

Platts University New York

Oil | Crude Oil | Oil Risk

US-Iran conflict may have limited oil price impact, but SPR, security policies unclear: study

Less than 4% of world oil supply in the red at $35/b: Wood Mac


Oilgram News

European Marketscan

Crude Oil Marketwire

Asia Pacific - Arab Gulf Marketscan


Latin American Wire

London — * Under 4% of oil supply currently cash negative
* Most US shale profitable 'well below' $30/b

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Fears of a deepening non-OPEC supply crunch in response to the latest oil price slump may be overdone as many producers are absorbing short-term losses in the hope of a price rebound, according a new study by research group Wood Mackenzie.

Citing up-to-date analysis of production data and cash costs from over 10,000 oil fields, Wood Mac said it believes 3.4 million b/d, or less than 4% of global oil supply, is unprofitable at oil prices below $35/b.

Even the majority of US shale and tight oil, which has been under the spotlight due to higher-than-average production costs, only becomes cash negative at Brent prices "well-below" $30/b, according to the study.

For many producers, being cash negative is not enough of an incentive to shut down fields as restarting flow can be costly and some are able to store output with a view to selling it when prices recover.

"Curtailed budgets have slowed investment, which will reduce future volumes, but there is little evidence of production shut-ins for economic reasons," Wood Mac's vice president of investment research Robert Plummer said in a note. "Given the cost of restarting production, many producers will continue to take the loss in the hope of a rebound in prices."

Even since oil prices began sliding in late 2014, there have been relatively few outright field production halts due to low prices, with only around 100,000 b/d shut in globally, according to the study.


Despite widespread fears of a major supply collapse, the US' shale oil output since late 2014, sharp deflation in service sector costs and greater drilling efficiencies have seen shale oil output remain more resilient to lower prices than first thought.

Wood Mac said falling production costs in the US over the last year have resulted in only 190,000 b/d being cash negative at a Brent price of $35/b.

The latest study contrasts with a similar report from the research group a year ago when it estimated that up to 1.5 million b/d of output -- focused in the US -- was vulnerable to being shut in at $40/b Brent.

At the time, US tight oil production was expected to start becoming cash negative a Brent oil price in the "high $30s."

"In the past year we have seen a significant lowering of production costs in the US, which has resulted in only 190,000 b/d being cash negative at a Brent price of $35," it said.

Last month, the International Energy Agency estimated that non-OPEC oil output will fall by 600,000 b/d this year, the biggest slide in almost 25 years, following gains of 1.4 million b/d in 2015 and 2.4 million b/d in 2014.

Despite calling US oil production "stubbornly robust," it increased its estimate of the likely drop in US oil production this year to 500,000 b/d.

Wood Mac said Canada is currently feeling the lion's share of the oil price slump with 2.2 million b/d of production currently at negative cash operating costs -- mainly from oil sands and small producing conventional wells in Alberta and British Colombia.

Venezuela is the second-hardest hit, according to the study, with 230,000 b/d from its heavy oil fields, followed by 220,000 b/d from aging UK North Sea fields.

--Robert Perkins,
--Edited by Jonathan Fox,