Fri. Sep 22nd, 2023
    US Shale Oil Production Expected to Decline in October

    According to the US Energy Information Administration (EIA), oil output from the top shale-producing regions in the US is projected to decrease for the third consecutive month in October, reaching its lowest level since May 2023. The EIA’s monthly drilling productivity report revealed that US oil output is anticipated to fall to 9.393 million barrels per day (bpd) in October, down from 9.433 million bpd in September. This decline of approximately 40,000 bpd would be the largest monthly drop since December 2022.

    The Permian Basin in Texas and New Mexico, which is the largest shale oil basin in the US, is expected to experience a decrease of nearly 26,000 bpd to 5.773 million bpd, the lowest level since April. Similarly, crude production in the South Texas Eagle Ford region is projected to decline by 17,000 bpd to 1.109 million bpd, the lowest level since December 2022. However, oil production in the Bakken region of North Dakota and Montana is predicted to increase by approximately 3,000 bpd to 1.227 million bpd, reaching its highest level since November 2020.

    Despite a few weekly increases in oil prices and rigs, the US rig count remains 16% lower than the previous year. Energy services firm Baker Hughes data indicates that US exploration and production companies are prioritizing returning money to investors and reducing debt rather than increasing oil and gas production.

    On the other hand, US oil and gas production is expected to reach record highs in 2023 and 2024, partly due to rising oil prices. US oil futures have been trading near their highest levels since November 2022 and have risen by approximately 14% year-to-date, after a 7% increase in 2022. However, US gas futures have experienced a significant decline of about 39% this year, following a 20% increase in 2022.

    In October, gas output from the major shale basins is projected to decrease by 0.3 billion cubic feet per day (bcfd) to 98.4 bcfd compared to the previous month. This decline would mark the third consecutive month of falling gas output, according to historical EIA data. The Appalachia region in Pennsylvania, Ohio, and West Virginia, which is the largest shale gas basin, is expected to witness a decrease in output, reaching its lowest level since April.

    In conclusion, US shale oil production is set to decline in October, reaching its lowest level since May 2023. Despite this, US oil and gas production are expected to reach record highs in the coming years, driven in part by rising oil prices.

    – US Energy Information Administration (EIA)
    – Baker Hughes