US Shale Oil Boom Grinds to a Halt as OPEC Keeps Pumping
Pyrrhic Victory
The EIA expects production from the shale plays to fall in July by 93,000 barrels a day, the largest drop since the boom began. The steepening decline provides some validation to OPEC members who decided to preserve their market share and let falling prices force others to cut back, said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $3.4 billion.
It may be a Pyrrhic victory for some OPEC members, such as Venezuela, whose budgets have been hampered by oil prices that fell more than 50 percent from last summer. The declines in U.S. production might not be piling up fast enough to boost crude revenues for them, O’Grady said.
“You’re seeing production go down, but is it going down fast enough?” O’Grady said by phone Monday. “If you’re a country like Venezuela, is it happening fast enough for you to basically be saved? That’s really the rub.”
--With assistance from Dan Murtaugh in Houston and Angelina Rascouet in London.
To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net David Marino, Rachel Graham
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