US crude Oil production rose to a record level of 13.47 million barrels per day in April, according to the US Energy Information Administration, Commerzbank's commodity analyst Carsten Fritsch notes.

US shale Oil companies need an average WTI price of $65

"There are some indications that this marks an interim high and that production will fall in the coming months. According to data from Oil service provider Baker Hughes, the number of active Oil rigs in the US fell by a further six last week to just 432. Drilling activity is thus at its lowest level since October 2021. The decline since the beginning of April amounts to 9% or more than 40 Oil rigs."

"The significantly lower price level since the slump at the beginning of April is clearly taking its toll. According to a survey conducted by the Dallas Fed at the end of March, US shale Oil companies need an average WTI price of $65 per barrel in order to drill a new well profitably. Depending on the region, the average break-even price was between $60 and $70 per barrel, with an average of $65 in the Permian Basin. The WTI price was mostly below $65 between the beginning of April and mid-June."

"After briefly rising to more than $75 due to the escalation of the Israel-Iran conflict, it has recently fallen back to $65. OPEC+'s strategy of reclaiming market share from shale Oil producers therefore appears to be paying off for the time being. The same cannot be said for the mantra ‘Drill, baby, drill!’ postulated by US President Trump."