Oil, US production collapses. Shadows on the future of shale

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In the United States, the extraction of crude oil is falling with a speed and intensity greater than expected: the output has already decreased by at least 15% and it is not finished, analysts warn

by Sissi Bellomo

(REUTERS)

In the United States, the extraction of crude oil is falling with a speed and intensity greater than expected: the output has already decreased by at least 15% and it is not finished, analysts warn

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The United States are the real surprise on the oil market, with a drop in production much faster and more decisive than expected, so much so that the cuts seem to even start to exceed those promised by Russia and Saudi Arabia under the Opec Plus agreement: Washington has already lost at least 2 million barrels per day of crude oil, compared to the more than 13 mbg it boasted in March. But this is only the beginning, the result of the precipitous retreat of shale oil.

Investment reduction

Independent US companies cut investment plans by around 50% on average, which will drop by $ 38 billion Cowen estimate: a squeeze that will further collapse US production in the coming months, even below 10 mbg according to some analysts, with little chance of a recovery in the short term.

Daniel Yergin, a renowned oil historian and president of IHS Markit, even thinks that the cuts may be partially irreversible: “The shale peak was in February,” he said, forecasting that US production will drop to a minimum of 9 mbg this summer, to recover later, but only up to 11 mbg.

Drilling to a minimum

Moreover, the WTI has already risen above $ 33 a barrel, just a month after the thud below zero. But there is no sign of revival from US producers. In reverse. The number of drilling rigs for oil has continued to drop for ten weeks, during which it has dropped by almost two thirds, to 683 units according to Backer Hughes: the minimum since July 2009.

Unconventional oil requires continuous drilling of new wells, even if only to keep the flow constant: this is why production is collapsing, particularly in the shale areas. In May in the Permian basin alone there was a reduction of at least 1 mbg according to Plain All Americans, in Bakken 500 thousand bg have already been lost according to the authorities of North Dakota.



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