Per the WSJ, a surprise surge in US oil and gas production and exports is helping to keep the world stocked, blunting the impact of widening conflict in the Middle East that has crimped key shipping
Doug Sheridan says
Doug Sheridan says
Per the WSJ, a surprise surge in American oil and gas production and exports is helping to keep the world stocked, blunting the impact of widening conflict in the Middle East that has crimpe
d key shipping lanes.
Tankers have recently carried more US crude to the Netherlands, the UK, Italy, Spain, France, Germany and other countries as more of Russia’s crude has flowed to Asia following Western sanctions. US oil shipments to Europe have jumped 34% since this time in 2022 and 82% from before Russia’s invasion of Ukraine.
Large public shale companies like as EOG Resources, Devon Energy and Diamondback Energy said they have sped up drilling times and are pumping more oil from wells they drilled. The scope and duration of those advances are unclear. US oil production had grown to about 13.2 MMBpd as of Oct, up almost 900,000 Bpd from the same month in 2022. Meanwhile drillers in Guyana and Brazil also swiftly increased their output in 2023, though neither gained as much as US shale.
All of that has kept the world’s oil inventories far more flush than traders expected months ago, subduing oil prices. In response, the OPEC and its allies moved in Nov to cut output further to prop up prices. US crude prices have dropped about 21% in Q4, and were down about 6% in Dec.
Advocates for fracking have long said fast-growing US oil and gas shale production could help stabilize markets in times of crisis, in part, because of the speed with which a shale well produces. Also, with oil prices lower than in late 2022, many shale drillers large and small are planning to keep spending roughly flat in 2024, in line with investors’ preferences. That is expected to curtail production growth. US crude-oil production is expected to increase some 300,000 Bpd in 2024.
Spending by US producers is expected to increase about 2% to a collective $115B in 2024. That is compared with a 19% spending boost in 2023, and still well below the annual average of $150B from 2010 to 2015, the industry’s heyday, according to a survey conducted by James West, an analyst at investment bank Evercore ISI. “They don’t spend like drunken sailors anymore."
To Sum It Up: Though the US shale industry has moved away from its hypergrowth phase, there is a dawning realization following global conflicts that demand for oil and gas will remain healthy for years to come, said John Arnold, former commodities trader. “I think there is growing confidence from investors that the industry isn’t going away anytime soon,” Arnold said.
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