U.S. Shale Oil Output to Drop by Record 194,000 Bpd in April — EIA
NEW YORK (Reuters) — U.S. shale oil output is expected to drop by 194,000 barrels per day (bpd) in April, most on record, to about 8.7 million bpd, according to the U.S. Energy Information Administration, as producers slash drilling activity after oil prices plunged.
Shale production has been sliding for several months, but the declines are expected to accelerate as demand has fallen by roughly 30% worldwide due to the coronavirus pandemic. Numerous producers, including U.S. majors Exxon Mobil Corp and Chevron Corp, have announced plans to rein in spending and are forecasting reduced output in coming months.
April’s decline is forecast to be followed by fall in May by 183,000 bpd to 8.53 million bpd, which would be the lowest since June 2019, and a sixth straight month of declines, the EIA said in a monthly forecast.
Crude oil prices dropped by more than 65% in the first quarter as demand plummeted due to the coronavirus pandemic and supply ballooned due to a price war between Saudi Arabia and Russia.
On Sunday, major producers inked a deal to cut production by 9.7 million bpd, with declining output from other nations expected to result in an overall fall of as much as 19.5 million bpd, or about 20% of world supply.
Output at every shale formation is expected to fall in May, with the biggest drop forecast in the Permian, the biggest U.S. basin, the EIA said.
Production in the Permian basin of Texas and New Mexico is expected to drop by 86,500 bpd in April, most since December 2015, and then by 76,000 bpd in May to 4.51 million bpd, the lowest since September.
The second-biggest decline is forecast to come from the Eagle Ford basin, with a drop of 35,000 bpd to 1.3 million bpd, lowest since May 2018.
Overall U.S. production hit a record of 12.9 million bpd in November 2019; of that, shale production was 9.1 million bpd, also a record, according to U.S. Energy Department figures.
The EIA said producers drilled 990 wells, the least since June 2017. Total drilled but uncompleted (DUC) wells fell 80 to 7,575, lowest since November 2018.
U.S. natural gas output was projected to drop to 83.2 billion cubic feet per day (bcfd) in May, lowest since August 2019, and what would be six straight months of decline. Output in the Appalachia region, the biggest U.S. shale gas formation, was set to fall 0.3 bcfd to 31.9 bcfd.
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