Oil prices continued to flow on Wednesday after China said it would match President Trump’s prices for the time being. The American price has dropped as low as $ 55 a barrel before recovering somewhat.
The sliding of crude prices indicates a deterioration of confidence in the force of the economy. And while lower oil prices benefit from consumers, in the end, to reduce prices to the pump, they are a big problem for American oil producers, many of which will find it difficult to make money by drilling new wells at these levels.
For the moment, many companies are waiting to see if prices are between $ 50 and $ 60 before adjusting drilling or expenses. Indeed, the prices of raw materials can be very volatile. After all, the oil brought in about $ 72 a barrel this time last week, before Mr. Trump hides the prices on almost all the countries with which the United States exchanges goods.
But if prices are still dropping, at around $ 50 per barrel, American oil production could decrease by around 8% in one year, according to S&P Global Community Insights.
Peter Navarro, Trump’s sales advisor, frequently cited the advantages of $ 50 barrel oil, saying that would limit inflation.
Profits should also decrease, the Moody Ratifs Agency said on Wednesday, providing that profits will reduce 10% or more in the world energy industry over the next 12 to 18 months. Moody’s previously expected profits would be stable compared to 2024.
The recent price slide has frightened American oil leaders, many of whom have supported Trump’s campaign in the hope that he would open up new areas for drilling and facilitate permits to obtain more easily for pipelines and other infrastructures.
“This is a fairly expensive compromise,” said Dan Pickering, Pickering Energy Partners, a Houston financial service company on Friday.
The equity prices on raw materials and companies have since deteriorated since then, leaving a large group of American oil and gas stocks of almost 25% in last week.
Oil prices were so low for over four years. The drop has not yet made a breach in the cost of gasoline, which has an average of $ 3.24 the gallon on Wednesday, the same as last week, according to the AAA Motor Club.
