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Illustration: Sarah Grillo/Axios

WTI, the benchmark U.S. oil future, traded Wednesday morning at its highest since early March — highlighting how the worst of shale's crisis is seemingly over, though more bankruptcies likely lie ahead.

Why it matters: Its price at the time — $43 — is still too low for many producers to do well, though it varies from company to company.

  • HSBC analysts, in a note this week, said $50 is a key price point.
  • "The current price environment is leading to shut-in production being brought back on, but it is not nearly high enough to stimulate a meaningful recovery in new activity in the majority of U.S. shale acreage," they note.

The big picture: "America’s most prolific shale drillers are accepting a fate once anathema to an industry obsessed with growth: Drilling just to ward off production drops," Bloomberg reports.

What's next: Going forward, the picture remains difficult, in part because the country does not have a handle on the pandemic.

  • While some shut-in wells are returning to production, total U.S. output is expected to remain far below the pre-pandemic peaks for quite a while.
  • The HSBC note this week sees only a "temporary boost" and that "more declines are coming" due to the drilling drop off. Reminder: New shale wells decline very fast.
  • They see a potential output rise this month and next, but then: "[T]his period of growth will be short-lived and will not be able to offset the collapse in oilfield activity for long."

What they're saying: Dallas Fed President Robert Kaplan, in an interview with Bloomberg TV this week, points out that the recovery in oil demand has "stalled a little bit" with the growth of COVID-19 cases.

  • "I think it is going to take until the middle of 2021 for that excess [oil] inventory to be worked off. You are going to have a very challenging energy industry and oil market, probably for the next 6-12 months depending on how the virus proceeds and how demand recovers," he said.

Catch up fast: The latest round of earnings reports provide a look at how the sector is dealing with the pandemic and its financial toll.

  • The big U.S. producer Pioneer Natural Resources posted a $439 million net loss on Tuesday afternoon that reflects the price collapse but also, as Reuters notes, how spending cuts helped "cushion the blow."
  • While Pioneer has largely restored output, the company is still keeping some of its production offline due to the "current commodity price environment."
  • Another large producer, Devon Energy, yesterday afternoon posted a $670 million net loss, with earnings beating estimates, and announced further spending cuts.

What we're watching: More large producers — EOG Resources and Marathon Oil — report later this week, and the huge independent Occidental's earnings come Monday, while several others have already reported substantial Q2 losses.

Go deeper

Coronavirus pandemic brings boom times for swaths of corporate America

Illustration: Aïda Amer/Axios

Not only are corporate earnings coming in above Wall Street’s expectations, but a large swath of corporate America is making more money now than before the pandemic hit.

By the numbers: Earnings season is nearly over. Of the companies that have reported quarterly results, 52% saw bigger profits compared to this time last year, according to data provided to Axios by FactSet.

Updated 3 hours ago - Energy & Environment

Bomb cyclone prompts blizzard warnings from Virginia to Maine

Computer model projection showing the intense storm off of Cape Cod on Jan 29, 2022, with heavy snow and strong winds lashing the coastline. (Weatherbell.com)

Blizzard warnings are in effect for 11 million people from coastal Virginia to eastern Maine as a historic winter storm is set to slam the Mid-Atlantic and Northeast beginning Friday.

Why it matters: The storm will bring hazards ranging from zero visibility amid hurricane force wind gusts and heavy snow, to coastal flooding that will erode vulnerable beaches and threaten property from the Jersey shore to coastal Massachusetts.

Updated 3 hours ago - Politics & Policy

Omicron dashboard

Illustration: Shoshana Gordon/Axios

  1. Health: Contact tracing fizzles across America — New clues emerge on long COVID — Omicron is finally burning out — It's very difficult to get access to antiviral COVID treatments — Axios-Ipsos poll: Omicron's big numbersAnother wave of death — FDA limits use of Regeneron and Lilly antibody treatments.
  2. Vaccines: Pfizer begins clinical trial for Omicron-specific vaccine — The shifting definition of fully vaccinated.
  3. Politics: Virginia AG says public colleges can't mandate COVID vaccines —Alaska governor joins Texas lawsuit over National Guard vaccine mandate — Navy discharges 45 sailors for refusing vaccine — Spotify to remove Neil Young's music after his Joe Rogan ultimatum — White House: 60M households have ordered free COVID-19 rapid tests.
  4. World: U.K. to lift travel testing requirement for fully vaccinated — Beijing Olympic Committee lowers testing threshold ahead of Games.
  5. Variant tracker

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