Courtesy of Goldman Sachs’ equity research team comes the chart below showing the current cost curve for US shale oil producers.
After falling between 2014 to 2016 on the back of productivity gains and a short-cycle supply chain, Goldman says that cyclical inflation is coming back in the US energy sector, more than compensating further productivity gains.
As such, it believes that shale oil breakevens likely troughed last year with the current price of oil around $50 per barrel providing a “good long-term floor to the oil price”.
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