As countries around prepare for…
arnings season is finally upon…
American shale output will continue its rise in June, the Energy Information Administration said on Monday in a forecast likely to further rouse the irritation of members of the Organization of Petroleum Exporting Countries (OPEC).
U.S. shale producers will increase output by 122,000 barrels per day next month to 5.401 million bpd, with the Permian Basin in Texas and New Mexico seeing the most growth. Roughly 71,000 barrels daily of gains will come from the southern formation.
Since the end of last year, OPEC has embarked on a mission to reduce the global oil supply glut to allow barrel prices to recover. Algeria and Venezuela are desperate to see high oil prices to return as both countries stand on the brink of economic and political collapse. But high output from Nigeria and Libya—two OPEC members exempt from the output quotas—as well as the United States is jeopardizing the bloc’s efforts.
Oil prices fell last week in anticipation of flooded markets, but NOPEC Russia and OPEC Saudi Arabia announced this morning that the two countries would be extending cuts until March 2018. The rest of the bloc is expected to act similarly following a meeting in Vienna on May 25.
Drilling in the U.S. is coming back quickly– a trend that shifts leverage back in favor of oilfield services companies who are starting to hike their prices after being force to take deep cuts over the past 2.5 years. According to S&P Global Platts, oil services costs are expected to rise by about 20 percent on average this year, and data from the U.S. Bureau of Labor Statistics – reported on by Reuters– shows that drilling costs jumped by 7 percent between November and March. That is the first sustained increase in costs in over three years, and costs could continue to inch up.
By Zainab Calcuttawala for Oilprice.com
More Top Reads From Oilprice.com:
Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…