(Bloomberg) -- Oil markets are offering a “Black Friday Special” that's probably inducing heartburn for a lot of U.S. drillers, RBC Capital Markets said.
In a late-year swoon, West Texas Intermediate crude prices are now flirting with $50 a barrel, the baseline at which larger shale explorers set their budgets for 2018, RBC analyst Scott Hanold said in a note to clients. Many smaller producers had planned for even more, he added, predicating their budgets on WTI being 10 to 15 percent above where it is now.
“Over the next three months, we expect most E&Ps to provide a 2019 budget," Hanold wrote, “and outside of a few better positioned companies, demonstrating free cash flow will be challenging at current oil prices."
To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net
To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Christine Buurma, Carlos Caminada
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