The Energy Information Administration (EIA) has projected a decline in shale oil production in the United States for the third consecutive month in September. The production is expected to drop to 9.39 million barrels per day (bpd), down from 9.433 million bpd in August and a record-high 9.476 million bpd in July. The majority of the decline will come from the Permian Basin, with a projected reduction of 26,000 bpd, followed by a 17,000 bpd drop in the Eagle Ford Basin. This decline in shale oil production is the largest negative monthly change since December of the previous year.
Despite this decline, the EIA remains confident in its forecast that total U.S. oil production will reach a record high this year and surpass that level in 2024. The agency has the same forecast for natural gas production. However, the rig count has been falling throughout the year, and although there has been a recent reversal of this trend, the total rig count remains 16% lower than it was at this time last year.
Some shale producers have reported increased well productivity due to improved drilling efficiency. However, this has not been enough to control oil prices, which are currently trading at over $92 per barrel for West Texas Intermediate. As a result, fuel prices at the retail level have also increased. Even if producers respond to these higher prices by increasing drilling activity, it would take time for the increased production to have an impact on crude and fuel prices.
Sources:
– Energy Information Administration
– Reuters
– Baker Hughes