Throughout the US shale oil and gas boom of the past 15 years, one of investors’ greatest concerns has been that the exploration and production companies needed continual infusions of cash to finance their investment programmes. After the rise in crude prices this year, it looked as though those fears could be put to rest: in the third quarter of this year the US E&P sector was able to cover its capital spending from its operating cash flows, if only barely. The plunge in oil prices over the past two months is bringing those concerns gushing to the surface again. In the third quarter, a sample of 50 of the largest listed US E&P companies in aggregate reported operating cash flows that were higher than their capital spending, for the first time since 2011, according to Financial Times.

ExxonMobil and Chevron, the country’s largest oil groups, also reported healthy profits from their US operations, which lost money in 2017. However, those results were achieved during a quarter in which the benchmark US West Texas Intermediate crude price averaged $73 a barrel. WTI has fallen steadily since the beginning of October, and after a slight rebound on Monday morning was trading at about $51.50 a barrel. One of the key factors driving prices down has been a surge in supply. US oil output has soared over the past two years, and this year, the country has become the world’s largest crude producer. Russia and Saudi Arabia are also pumping oil at record rates.

Meanwhile, concerns over the world economy, in part because of tensions over trade, have led to diminished expectations for global demand growth. Over the weekend, President Donald Trump again claimed credit for the fall in oil prices, writing on Twitter: “So great that oil prices are falling (thank you President T).” His administration has contributed to the decline in prices by easing off on the reinstated sanctions on Iran, allowing the country’s biggest customers including China and India to continue buying some of its crude. Mr Trump has also put pressure on Saudi Arabia not to back oil production cuts when ministers from OPEC and its allies meet in Vienna on December 6, linking the kingdom’s policy to the US response over the murder of the journalist Jamal Khashoggi.