By Collin Eaton (NYSE:ETN)
HOUSTON (Reuters) – North American oil producers that have been increasing spending to take advantage of this year’s higher prices will dial back as November’s reversal fuels worries about a 2019 surplus, energy executives say.
U.S. light sweet crude settled on Friday at $50.42 a barrel, down nearly 23 percent since October and the lowest in more than a year over worries about oversupply and the Sino-U.S. trade war. The drop comes as many oil producers are assembling drilling budgets for 2019.
“Everybody’s going to get hit,” said Cole Frederick, co-founder of Peak Land Services, which helps oil companies acquire properties in Texas shale fields. He noted, however, that November’s price is well above the lows that put hundreds of smaller companies out of business in early 2016.
“I was praying for $50 oil two years ago when the price was $26,” Frederick said in an interview. “If you’re a smaller guy, you’ve got to be more selective.”
Oil in West Texas and North Dakota traded at discounts to the U.S. benchmark of around $6 and $15 a barrel, respectively, as production outran transport space to carry crude to markets. In Western Canada, heavy oil on Friday fell to a $37 discount to U.S. crude futures.