(Bloomberg) -- Oil climbed above $61 a barrel for the first time in two and a half years, surpassing a crucial threshold for spurring new shale drilling.
Wednesday’s 2 percent jump in New York-traded futures delivered exactly what the largest cohort of oil executives in a Dallas Federal Reserve survey last month said they needed to justify more shale exploration: prices above $61. If crude continues to climb and crosses the $66 mark, even more corporate chiefs indicated they’re ready to pile in, according to the survey.
U.S. shale drillers have become OPEC’s bogeyman because of their penchant for lightning-fast drilling expansions that threaten to undo the cartel’s hard-won reductions of a worldwide glut. For the day, oil rose on expectations that a U.S. government report scheduled for release on Thursday will register the longest decline in crude stockpiles since the summer driving season.
“The U.S. shale-OPEC tug of war will simultaneously cap upside price potential and downside risks,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London.
In its survey of more than 100 oil industry executives in Texas, New Mexico and Louisiana, the Dallas Fed found 42 percent would expand drilling with prices between $61 to $65. Another 31 percent would increase investment when prices topped $66, the survey found.
Oil has risen for the past two years as the Organization of Petroleum Exporting Countries and allied producers including Russia trimmed supplies to reduce a global glut.
West Texas Intermediate for February delivery rose $1.10 to $61.48 a barrel at 12:26 p.m. on the New York Mercantile Exchange. That’s the highest intraday price since June 2015.
See also: Oil’s Famous Five: People Who Could Define the Market in 2018
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