The expected decrease in shale oil production this summer is causing oil prices to rise. According to the Drilling Productivity report released June 8 by the Energy Information Administration, the government is calling for a 91,000 less barrels per day of shale oil in July. Oil prices seemingly rebounded after the data was released. This news comes on the heels of a decline in oil prices on June 8 due to the Chinese oil crisis concerning oversupply and less demand.
Production efficiency is helping shale oil flow remain steady although there are fewer rigs drilling for oil than in the past. The expected decrease in production, including fewer new drilling explorations and spending cuts, has resulted in the commodity's prices rising more than 30 percent since experiencing lows in March.
Stall may alter price of gas
The discovery of U.S. shale oil supplies in the past few years not only helped the country's growth in output, but helped oil prices remain relatively low. Because of this, some traders are not happy with the EIA's call to slow production. Their concern is the price of oil; they believe that if production is curbed, cost will soar. Instead, they're suggesting continuing shale output at high levels, which would result in a flatline and steady prices of oil.
The boom in shale oil in the U.S. turned the country into the world's largest fuel exporter. The supply is now needed to rebalance the global inventory since the Organization of Petroleum Exporting Countries chose to maintain a higher level of production.
More details on shale oil pullbacks and global oil supplies will be known this week as organizations release reports on the matter. The EIA's monthly short-term energy outlook will come out late June 9, OPEC's oil report will be issued June 10 followed by the International Energy Agency's report on June 11.
More information on U.S. crude oil can be found on PennEnergy's research area.