Crude oil production in the U.S. shale patch is set to decline by 68,000 bpd next month, with every play registering declines in output except the Permian, the Energy Information Administration said in its latest Drilling Productivity Report.
While production in the Permian is expected to increase by 23,000 bpd to 4,173 million barrels daily, output in the Niobrara shale play alone will offset this with an equal decline. In the Eagle Ford, production is set to decline by 28,000 bpd—the biggest decline—while production in the Anadarko, Bakken, and Appalachia plays is seen to fall by 20,000 bpd, 19,000 bpd, and 1,000 bpd, respectively.
This means total shale oil production in October could average 7.64 million bpd daily next month, down from 7.708 million bpd this month.
Oil production across U.S. shale plays fell sharply in late spring as the oil price collapse made a lot of wells unprofitable and even loss-making. With oil prices still around 40 percent below their levels from the start of the year and the outlook negative, the October decline may not be the last monthly one for the shale patch.
The outlook on oil demand remains the single most negative factor for oil price, with the latest blow in this respect being BP’s 2020 Energy Outlook, according to which oil demand may never return to pre-pandemic levels, meaning the peak in global oil consumption might have been reached last year.
Another bearish factor for prices was the pending reopening of Libya’s oil ports, which would signal an increase in production, too. Libya’s oil production has been slashed to less than 100,000 bpd amid the months-long blockade of the export terminals but reopening them will prompt a ramp-up in output. The reopening is not yet a done deal but the latest reports suggest it may only be a matter of time.
By Irina Slav for Oilprice.com