EIA: US Shale Output to Dip for Eighth Consecutive Month
NEW YORK, May 16 (Reuters) - U.S. shale oil output is expected to fall in June for the eighth consecutive month, according to a U.S. government forecast on Monday, as the squeeze from a two-year rout in crude prices worsens.
Total output is expected to fall by nearly 113,000 bpd to 4.85 million bpd, according to the U.S. Energy Information Administration's (EIA) drilling productivity report released on Monday.
Bakken production from North Dakota is forecast to fall 27,000 bpd, while production from the Eagle Ford formation is expected to drop 58,000 bpd.
Production from the Permian Basin in West Texas is expected to drop 10,000 bpd, according to the data, representing its second consecutive monthly decline.
Oil prices are down nearly 60 percent from their mid-2014 highs, which has caused producers to slash capital spending and lay off thousands of workers.
Brent crude prices have rallied this year and were hovering just under $50 a barrel on Monday. Analysts warn that production could pick up later this year as producers lock in hedges at better prices to safeguard future output.
Total natural gas production is forecast to decline for a sixth consecutive month in June to 46.0 billion cubic feet per day (bcfd), the lowest level since July 2015, the EIA said. That would be down almost 0.5 bcfd from May, making it the biggest monthly decline since March 2013, it noted.
The biggest regional decline was expected to be in Eagle Ford, down 0.2 bcfd from May to 6.3 bcfd in June, the lowest level of output in the basin since April 2014, the EIA said.
In the Marcellus formation, the biggest U.S. shale gas field, June output was expected to ease by about 0.1 bcfd from May to 17.3 bcfd in June. That would be the fourth monthly decline in a row.
In the Marcellus formation, located in Pennsylvania and West Virginia, initial production during the first full month for a new well was expected to increase to 11.1 million cubic feet per day in June. That compares with 8.3 mmcfd in June 2015.
If correct, that would be the 14th straight monthly increase in initial production for a new well in the Marcellus. That growth rate, however, was on track to decline for a fourth consecutive month in June.
(Reporting By Catherine Ngai and Scott DiSavino in New York; Editing by Chris Reese and Paul Simao)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.