The EIA’s monthly Drilling Productivity Report projected that m/m output in the six main shale oil areas would fall by 57 thousand barrels per day (kb/d) in May. It also revised April output to a 2kb/d m/m fall from a small increase previously, indicating that the decline started earlier than the EIA first believed. The fall in drilling activity in US shale areas has been so large that the decline in output from existing wells can no longer be offset. The EIA expects new well output in May to be 34% lower than in February, which is no longer enough to compensate for the declines.With the US shale oil industry still affected by a lack of cash flow and deteriorating credit conditions, we expect new well output to stay below the declines for several more months. “With shale oil drilling activity having fallen further this month, we expect the EIA’s predicted decline in shale oil output to deepen in June. Based on current rig counts, we expect US shale oil output to decline by 73kb/d m/m in June. We expect prices to recover strongly enough for output to stabilise later this year.” – said Standard Chartered in a report on Monday
The material has been provided by InstaForex Company – www.instaforex.com