U.S. oil producers eye shutting down operations as coronavirus dry up need for fuel
Oil producers in the U.S. are making painful decisions about how to close their operations after the coronavirus pandemic decimated the need for fuel, The Associated Press reported.
The price of U.S. benchmark crude tumbled by more than 70 percent since the start of the year, selling for $17 a barrel on Friday, pretty below what producers needed to remain viable.
Parsley Energy, a mid-sized fracking company based in Austin, Texas, lost half its market value since the beginning of the year and informed regulators it has been shutting down enough wells to take around 400 barrels of oil per day off the market.
In recent weeks, Exxon decided to cut its capital spending plan by 30 percent, or $10 billion. Also, Chevron gutted its capital expenses by 20 percent, or $4 billion. Both Exxon and Chevron are planning to suspend drilling for new oil in different parts of the world and are expected to shrink further since conditions have deteriorated since their announcements, The Associated Press added.