Oil climbs above $65 for first time in more than three years
- West Texas Intermediate crude oil climbed above the $65 mark for the first time in more than three years on Wednesday.
- The benchmark is important because it is considered a 'break-even' price for producers.
A barrel of US benchmark West Texas Intermediate crude oil sold for more than $65 for the first time since December 2014 on Wednesday.
The milestone is significant because it is the price point at which extraction oil is profitable for most drilling companies, depending on the method they use.
Oil prices have been at near record-lows for years, bottoming out at $26.21 in February 2016 as cheaper US shale oil flooded the market. However, oil got a boost starting later that year when OPEC and its allies, including Russia, voted to slash production in order to increase demand. The cartel reiterated these cuts in November.
Low prices have forced many major companies to roll back oilfield investments, the Wall Street Journal reports. Anadarko and Chevron both plan to reduce spending on new wells as well as continued operation of existing sites.
The US Energy Information Association estimates that fossil fuel production will hit an all-time high this year as well as in 2019. The government agency specifically cites fracking — a cheap but environmentally harmful method of extracting gas and oil from shale — as the catalyst for the uptick.
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