U.S. Shale Booms And Depresses Oil Prices Again

via The Global Warming Policy Forum (GWPF)
http://www.thegwpf.com

U.S. oil production continues to rise relentlessly, frustrating efforts by OPEC and non-OPEC oil exporters to rebalance the global market and secure an increase in the price of crude.

After a devastating slump in 2015 and 2016, the U.S. oil industry has returned to strong growth, with drilling and output rising rapidly (tmsnrt.rs/2qJXDCG).

U.S. production is now forecast to grow by an average of 440,000 barrels per day (bpd) in 2017 and another 650,000 bpd in 2018, according to the U.S. Energy Information Administration (EIA).

U.S. crude and condensates output rose by 62,000 bpd month-on-month to almost 9.1 million bpd in March (“Petroleum Supply Monthly”, EIA, May 2017).

Production has increased by more than 530,000 bpd from its recent low of less than 8.6 million bpd in September, adding to an already well-supplied global market and delaying a drawdown in stocks.

Weekly estimates prepared by the agency indicate output continued to increase in April and May and now stands at around 9.3 million bpd (“Weekly Petroleum Status Report”, EIA, May 19).

While the weekly estimates are considered less reliable than the more comprehensive monthly numbers, they have generally provided a good guide to trends in the monthly data (tmsnrt.rs/2reYzCF).

Most of the extra output between September and March came from oilfields in the Gulf of Mexico, where production increased by 257,000 bpd, and Alaska, where output was up by 74,000 bpd.

But production from fields in the Lower 48 states excluding the Gulf of Mexico, most of which comes from onshore shale plays, also rose, by 200,000 bpd (tmsnrt.rs/2qJOnyN).

In March alone, production in the Lower 48 states excluding the Gulf of Mexico rose by 35,000 bpd to its highest level in nearly a year (tmsnrt.rs/2qJT5fH).

BACK TO BOOM

U.S. shale output will almost certainly rise substantially in the rest of 2017 and into 2018 given the typical six-month lag between spudding new wells and the beginning of their commercial production.

Reported output for March mostly reflects wells started before the end of September 2016, when there were fewer than 425 rigs drilling for oil in the United States, according to oilfield services company Baker Hughes.