Just when oil seemed to have finally gained some momentum, West Texas Intermediate plummeted to $39 a barrel Monday morning. The dive left one crude economic expert with a phrase to capture the warranted anxiety of the industry: “All bets are off.”
Thomas Tunstall, an economics professor at the University of Texas at San Antonio and notable expert with energy commodities, claimed there’s no telling “as far as what the new low will be.” Thanks to the severity of Chinese shares dropping and the selloff in oil and other commodities, the Dow Jones industrial average lost more than a 1,000 points in volatile trading.
The San Antonio Business Journal reports that Tunstall previously predicted $35 per barrel oil was possible based on record production levels and inventories. Despite falling rig counts, production per well keeps rising. Currently, crude is cutting it close to that price prediction. WTI oil hasn’t seen this low of a value since February 2009.
While the Sothern Texas Eagle Ford Shale continues to push out record numbers of barrels per day (2.4 million currently), rigs dropped down to 99 Friday based on numbers reported from Baker Hughes. Regardless of how low things go, “The production keeps coming,” Tunstall noted.
Big companies such as EOG Resources have stated in the past that $40 per barrel could still squeeze a profit. But according to the Business Journal, other companies such as Abraxas Petroleum Corp. have claimed that they will continue a hiatus in the Eagle Ford until oil creeps back up to $65 per barrel.