The new magic number in the oil industry is $50.

BP Plc, rig-owner Nabors Industries Ltd. and explorer Pioneer Natural Resources Co. all said in the past 24 hours that prices above $50 will encourage more drilling or provide the needed boost to cash flow. With oil bouncing close to $45 a barrel, an industry that has been shaving costs to stay competitive is ready for signs of stability at a price level less than half of 2014’s average.

At an average price of $53 per barrel of oil means the world’s 50 biggest publicly traded companies in the industry can stop bleeding cash, according to oilfield consultant Wood Mackenzie Ltd. Nabors, which owns the world’s largest fleet of onshore drilling rigs, said it has already been talking with several large customers about plans to boost work in the second half of the year if prices rise "comfortably" above $50.

"It’s not just about touching $50," Fraser McKay, vice president of corporate analysis at Wood Mackenzie in Houston, said Tuesday in a phone interview. "It’s about touching, maintaining and having the perception of future prices above $50 a barrel before you start sanctioning projects that are economic at $50 a barrel."

http://www.bloomberg.com/news/articles/2016-04-26/oil-s-magic-numbe...

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I hope $50 will do it as I don't see the price getting much above that until the second half of 2017.  I'd love to be wrong.

Wouldn't it be against the Saudi's best interests for them to allow prices to get to a profitable range for US frackers?
Spikes into a profitable range would be like bonuses for them.

Not if they can maintain their market share.  Low prices have hurt the Sauds economy.  They could benefit significantly from higher prices.  As long as they can maintain their customers and export volumes I suspect they would be happy with $50 crude.  Keep in mind that $50 may bring back U.S. production from the better rock in the better basins but not all the production that existed at $100.  Many domestic E&P companies won't be able to make a sufficient return on investment at $50.

Yes, I'm sure they would like as much as they could get but still be somewhat in a position of control of production. What price that may be they'll try finding out..
US production from fracking is price sensitive. A price that would allow some production but not enough to interfere with their market would be likely be tolerated. And as long as it they who are doing the majority of the production. Cutting production doesn't work for them like it has in the past.

They aren't the only game in town any more....

The entire global energy dynamic is in flux.  What happens if other countries get around to developing their shale reserves?  The old paradigm is fast receding into history. A new one will emerge incrementally over the next ten years or so.  The Sauds may just be too late to diversify away from oil and build a more stable and diverse economy.

In my family's case, it takes $100 a barrel to get the drillers interested in us.  We are in the deep zone and it is much more costly to drill that deep.  While it is believed TMS extends down to us, and we know the Tuscaloosa is down there, it is more likely for us that they drill for gas.  And gas is dirt cheap, no where close to $100 BOE for us.  So it will be for my heirs.

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