Liam Denning, Columnist

Flat Oil Futures Should Keep Frackers Quiet

The bounce from negative prices doesn’t go far enough to justify fresh drilling.

May 15, 2020 at 4:09 PM UTC

Liam Denning is a Bloomberg Opinion columnist covering energy. A former banker, he edited the Wall Street Journal’s Heard on the Street column and wrote the Financial Times’s Lex column.

Hold still.
Photographer: Bloomberg/Bloomberg

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Almost a month after its plunge into minus-land, oil is on a tear. Or not. It depends which oil price you’re watching. The front-month Nymex oil future — for June, currently — has surged by more than 50% so far this month and now trades close to $30 a barrel. Peer further out, though, and the landscape looks a lot flatter.

The rally in the June contract (along with swaps for the balance of the year) owes much to relativism: Once you’ve seen negative prices, how much worse can it get? But it also reflects real signs of recovery in oil demand as Covid-19 lockdowns begin to ease and cuts to supply accelerate.