US oil production is falling more steeply than expected. It forces analysts to scale back output projections even before a deep plunge in planned upstream spending further cuts supply later this year. Report informs citing the Financial Times.
Genscape, a unit of consultancy Wood Mackenzie, said production by May 20 had dropped almost 20 percent, or 2.3m barrels a day, from a peak of 13.24m in March.
The volume lost already is almost as much as Russia and Saudi Arabia last month pledged to cut in a historic supply deal that begins in June. It will alarm US politicians, including President Donald Trump. He pressured Opec to shoulder production cuts to push up oil prices so that American producers could profitably keep pumping oil.
Genscape’s latest numbers, based on satellite monitoring and heat sensors at facilities across the US, suggested the most significant reductions were in Texas’s Permian shale — down 1.15m barrels a day — and North Dakota’s Bakken — 480,000 b/d.
Paul Horsnell, head of commodities research at Standard Chartered, said producers had already cut about 1.5m b/d more than official estimates. He predicted output could drop below 10m b/d in the coming weeks, down more than 3m b/d since March.
US shale output responds faster to price changes than other oil sources, but analysts have disagreed over how much supply it will shed during the worst oil-price crash in decades.
Goldman Sachs had estimated the losses would reach a maximum of 1.3m b/d in the second quarter before “mostly reversing” as the oil market began to recover in the second half of 2020.