Oil prices would have to bounce back to $60 a barrel for U.S. oil producers to generate a good rate of return, says S&P Capital IQ's Stewart Glickman. Fred Katayama reports.
Oil prices falling to their lowest levels in nearly seven years, creating further headaches for U.S. producers of shale. And they're taking Wall Street with it. Oil stocks Exxon and Chevron dragged down the Dow and S&P 500. Shares of North Dakota producers Whiting Petroleum and Oasis Petroleum suffered steeper drops. U.S. crude dropping further below $40 on Monday after the oil cartel OPEC failed to agree on Friday to cut production to stem oil prices. It has dropped more than sixty percent since June 2014. Research firm Bentek Energy predicts oil will rebound above $50 in 2016. But S&P Capital IQ energy analyst Stewart Glickman thinks, even at that level, most U.S. producers will still generate negative free cash flow. He said: "At $50 a barrel, U.S. oil producers will be still in pain, but a little less pain." Glickman said oil prices would have to rise to $60 a barrel to produce a good rate of return.