Sustained higher oil prices likely will encourage U.S. producers to increase production this year, which could eventually weigh on prices, J.P. Morgan analysts say, now forecasting U.S. crude output to exit 2021 averaging 11.78M bbl/day, 710K bbl/day more than a year earlier.
“At current prices, most U.S. onshore operators are economic, leaving a vast group of operators, from large public companies to private players, in good position to ramp up activity in H2 and build solid momentum for higher volumes in 2022,” the bank says.
But a Bloomberg roundup of data on shale drillers shows they are generally sticking to their pledge to hold the line on production in order to cut costs, reduce debt and return money to shareholders.
The more restrained shale drillers are this year, “the more they can potentially grow production at higher prices next year and beyond,” says Michael Tran, managing director for global energy strategy research at RBC Capital.
To turn a profit in the Permian’s Delaware Basin, a ~$33/bbl oil price is required, down from $40/bbl in 2019, according to Bloomberg; front-month WTI crude settled at $65.61/bbl on Friday.
But drilling activity has been gaining steadily: According to data from Baker Hughes, the number of oil rigs active in the U.S. has jumped 80% after bottoming out in August, and has increased for 14 of the past 16 weeks.
Get news on your e-mail.
Need Help? Call Us 24/7
+353 1 211 8666
We present a high performance Merchant service for your business or your online shop. We have more than 10 years of experience and quality in the Fintech sector.