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With Oil Prices Tanking, We See Values

Dave Meats, CFA (david.meats@morningstar.com),Preston Caldwell (preston.caldwell@morningstar.com)

West Texas Intermediate crude oil has fallen from over $65 a barrel in late April to about $54/bbl today, a hair below our midcycle forecast of $55/bbl. The decline in crude prices has erased most of the E&P companies' gains from earlier in the year, when fundamentals were supported by strong compliance with steep OPEC cuts. Debottlenecking in the United States has since enabled shale producers to resume their rapid growth, however, while trade fears increasingly threaten to stymie demand.