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Illustration: Sarah Grillo/Axios

U.S. oil prices are above $30-per-barrel for the first time since mid-March as producers cut output while demand continues recovering from its April depths as restrictions are eased.

Why it matters: The increase eases pressure on the industry, but hardly alleviates the distress as prices remain below profitable levels for many producers and analysts caution that the recovery is shaky.

  • Indeed The Wall Street Journal reports that Gavilan Resources LLC, the oil-and-gas producer formed by the Blackstone Group, cited the price collapse in filing for Chapter 11 bankruptcy protection Friday.

Driving the news: Futures prices for West Texas Intermediate have risen to roughly $32 per barrel since markets reopened Sunday evening, adding to last week's gains. The global benchmark Brent crude is at $34.50, its first foray above $34 since early April.

The big picture: "Producers are significantly throttling back output and, with demand increasing, the market is on a slow path towards recovery," Rystad Energy analyst Paola Rodriguez-Masiu said in a note.

  • In addition to the OPEC+ output-cutting pact and some OPEC members vowing to go beyond it, producers outside the group are curtailing the flow of oil faster than expected, she said.
  • In particular, operators in the U.S. have announced production shut-ins of at least 1.2 million barrels per day in May and June.

Threat level: This wide-angle New York Times piece notes that despite the modest recovery, the historic collapse in demand and prices will exact a heavy toll as some companies go bankrupt.It summarizes the views of KPMG analyst Regina Mayor, who "expects a prolonged price slump that will force the American oil industry into a major restructuring."

The number of active U.S. oil rigs fell by another 34 units to 258 last week, compared to over 800 a year ago, per the latest tally by the oilfield service giant Baker Hughes.

  • While producers are shutting down some existing wells, the rapidly falling drilling rig count is a sign of how companies are also slashing plans for future production.
  • The Energy Information Administration projects U.S. production, which was nearly 13 million barrels per day at the end of 2019 but now falling fast, dropping below 11 million this year and staying there deep into 2021.

Go deeper: Oil's risky recovery and the damage done

Go deeper

Ben Geman, author of Generate
Updated Aug 17, 2020 - Energy & Environment

Trump administration finalizes drilling plan for Alaska Arctic refuge

Polar bears in the Arctic National Wildlife Refuge. Photo: Sylvain Cordier/Gamma-Rapho via Getty Images

The Interior Department on Monday finalized plans to open Alaska's Arctic National Wildlife Refuge to drilling, a pivotal — but hardly the final — step in a decades-long battle over the ecologically sensitive region thought to hold huge oil deposits.

The big picture: Former Vice President Joe Biden's campaign said he would look to prevent drilling if elected. "His plan released last year made clear that he will permanently protect ANWR and other areas impacted by President Trump's attacks on federal lands and waters," the campaign said.

Dion Rabouin, author of Markets
Aug 18, 2020 - Economy & Business

The American real estate conundrum

Reproduced from CivicScience; Chart: Axios Visuals

The housing market has been a solidly bright spot in the U.S. economy in recent months.

Yes, but: There remain serious questions about what the next phase for the market will be as the coronavirus pandemic has created an enormous amount of uncertainty about where and how people will live.

13 mins ago - Politics & Policy

McConnell drops filibuster demand, paving way for power-sharing deal

Senate Majority Leader Chuck Schumer (R) and Minority Leader Mitch McConnell attend a joint session of Congress. Photo: Olivier Douliery/AFP via Getty Images

Senate Minority Leader Mitch McConnell has abandoned his demand that Democrats state, in writing, that they would not abandon the legislative filibuster.

Between the lines: McConnell was never going to agree to a 50-50 power sharing deal without putting up a fight over keeping the 60-vote threshold. But the minority leader ultimately caved after it became clear that delaying the organizing resolution was no longer feasible.

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