Production growth in U.S. shale fields has driven a 10 percent recovery in the country’s overall crude output since September. Shale drilling has become increasingly profitable since oil prices largely stabilized above $50 a barrel since last winter, when OPEC and 11 other exporters agreed to take 1.8 million barrels a day of production off the market.

Drilling in the Permian basin in Texas and New Mexico is once again expected to lead that gains, with output poised to rise by 71,000 barrels a day in June. The Permian is the epicenter of the U.S. shale oil revival.

“Right now it is a Permian story. It has come back bigger, faster, stronger,” RBC Capital Markets Global Head of Commodity Strategy Helima Croft told CNBC’s “Closing Bell” on Monday.

Output in southeastern Texas’s Eagle Ford region is seen rising 36,000 barrels a day next month. North Dakota’s Bakken and the Niobrara shale, located in northeastern Colorado and parts of three adjoining states, are seen contributing growth of several thousand barrels a day.

The EIA expects output in the natural gas-rich Marcellus and Utica shales to be roughly flat.

U.S. crude prices rallied above $49 a barrel on Monday after Saudi Arabia and Russia announced they had agreed to extend OPEC-led output cuts through March 2018. The gains eroded somewhat after the EIA report, with U.S. crude settling at $48.85 a barrel.

A rising forecast for shale oil prediction is “exactly the type of thing that undercuts these OPEC, non-OPEC efforts, this verbal intervention,” said John Kilduff, partner at energy hedge fund Again Capital, referring to the common tactic of attempting to boost oil prices with policy pronouncements.

Source

NO COMMENTS

LEAVE A REPLY

four × one =