U.S. Sees Higher Shale Output First Time in Six Months on OPECby
Permian Basin output to reach a record in January, EIA said
Oil prices touched a 17-month high Monday on output-cut deal
Crude output at major U.S. shale plays is poised to climb for the first time in six months, as oil prices rise on planned cuts by OPEC and other producers.
U.S. shale production could top 4.542 million barrels a day, a modest increase from December forecasts, the Energy Information Administration said in its Drilling Productivity report released Monday. The gain is being led by the oil-rich Permian basin of New Mexico and Texas, where production has risen steadily for the past 15 months. EIA projects Permian output to rise by 37,000 barrels in January, reaching a record of 2.13 million barrels a day.
The Niobrara shale play in Colorado and Wyoming is expected to see a modest 3,000 barrel-a -day uptick in January output, while the Eagle Ford in South Texas and Bakken shale fields of North Dakota will continue to extend declines.
The forecast comes after the Organization of Petroleum Exporting Countries agreed to cut output by 1.2 million barrels a day starting in January, and other countries led by Russia agreed to trim production by 558,000 barrels a day. U.S. producers stand to gain from the deal as higher oil prices encourage renewed drilling in shale regions. U.S. shale production could grow from 4.5 million barrels a day in December to over 5 million end of next year, Citigroup Inc. said in a report Monday.
Following news of the OPEC agreement, EIA on Dec. 6 revised its 2017 U.S. production forecast to 8.78 million barrels a day from 8.73 million. U.S. oil rig counts also rose by 21 to 498 in the week ended Dec. 9.
West Texas Intermediate for January delivery rose $1.33 to settle at $52.83 a barrel on the New York Mercantile Exchange. It’s the highest close since July 14, 2015.
“U.S. monthly oil production could increase more quickly next year if OPEC’s recent decision to trim its output pushes the price of oil above $50 a barrel, which would encourage more investment in U.S. regions that have tight oil production,” EIA Administrator Adam Sieminski said in an e-mailed statement last week.