U.S. Shale Producers to See Minimal Expansion Despite Oil Rally

Oct 6, 2021

(Bloomberg) U.S. shale oil production will expand at a “modest rate” over the next 18 months even as prices touch multiyear highs, according to BloombergNEF, leaving OPEC in a powerful position as the world cries out for more barrels.Producers are using cash flow to pay down debt and reward shareholders rather than invest in new drilling, BNEF said in a report published Wednesday. Yet demand for energy is rising around the world. U.S. crude futures reached a seven-year high this week after OPEC and its allies declined to alter their supply agreement to raise output.

West Texas Intermediate crude dropped 1.7% to $77.61 a barrel at 11:01 a.m. in New York. Prices have risen 60% this year.

U.S. production will reach 12.1 million barrels by the end of next year, up 440,000 barrels a day from the end of 2021, according to BNEF’s base case scenario. That’s lower than its pre-pandemic record high of 13 million from 2019. Under a bull scenario, in which prices average $80 a barrel from now until the end of 2022, BNEF sees production rising to 12.4 million barrels a day.