OPEC output continues to fall as U.S. shale surges

by WorldTribune Staff, April 13, 2017

OPEC on April 12 said its output of crude oil continues to drop as U.S. shale surges toward record levels.

In its monthly oil market report, the International Energy Agency (IEA) said OPEC output fell by 365,000 barrels per day in March to 31.68 million barrels per day.

A Concho Resources drilling rig in New Mexico’s Permian Basin.

Meanwhile, U.S. shale will enjoy a second production boom if oil prices hold above $50 a barrel, the Energy Information Administration (EIA) said, adding that a second burst of shale drilling could bring U.S. oil production close to an all-time record by the end of 2018.

The EIA projects U.S. output could rise above 10 million barrels a day by the fourth quarter next year, an increase of 1.2 million from current levels. A surge of that size would put U.S. oil production within 30,000 barrels a day of the nation’s record, set in November 1970.

“OPEC knew the likelihood of U.S. shale picking up, but what they didn’t know – and what none of us know – is how strong it will come back,” said Neil Atkinson, head of the oil markets division of the International Energy Agency (IEA).

OPEC said its output continued to drop in March as members tightened compliance to agreed cuts.

The 13-member OPEC committed last year to cut about 1.2 million barrels of oil a day in a bid to bring a vast global oversupply of crude back in line with demand and raise prices.

The agreement helped raise oil prices about 20 percent after it was announced on Nov. 30. Russia and 10 other non-OPEC producers also pledged to cut another 558,000 barrels a day.

Saudi Arabia is set to support an extension of the production cuts at OPEC’s next meeting, slated for May 25.

OPEC said on April 12 the forecast for U.S. supply was revised upward by 200,000 barrels, or an additional 540,000 barrels a day. That is “due to expected higher rig counts, and higher well completions, as well as greater access for producers to land and capital.”

The number of U.S. oil rigs in operation climbed by 11 this week to 683, according to Baker Hughes (BHI).

Rigs in the Permian Basin jumped by eight to 339. Eagle Ford rigs rose by three to 68. Cana Woodford rigs rose by two to 52. The rig count in Colorado’s DJ Niobrara field ticked up by one to 24.