EIA Forecasts Six-Month High for US Shale Oil Output in June

By Published On: June 20, 2024Categories: Daily Market News & Insights

US oil production from leading shale regions is set to reach a six-month high in June, according to the U.S. Energy Information Administration (EIA) in its latest Drilling Productivity Report. The EIA projects that production in the top shale basins will increase to 9.85 Mbpd, marking the highest output since December 2023.

The rise in shale production, which accounts for roughly three-quarters of the total U.S. oil output, is attributed to enhanced well productivity. The Permian Basin, the largest U.S. oilfield spanning West Texas and New Mexico, is expected to see production per new rig increase to 1,400 bpd in June, up from 1,386 bpd in May. This would be the highest monthly output per rig since November 2021. Overall, Permian output is anticipated to rise by 17,970 bpd to reach 6.19 Mbpd.

In southeastern Texas, the Eagle Ford basin is forecast to increase production to 1.11 Mbpd, the highest since December. The Bakken region in North Dakota and Montana is set to see a marginal rise in output by 52 bpd, reaching 1.31 Mbpd, also the highest since December.

While oil production is on the rise, natural gas output in major shale basins is projected to decline to a five-month low of 99.2 billion cubic feet per day (bcfd) in June, down from 99.5 bcfd in May. This is a notable decrease from the record high of 101.9 bcfd in November 2023. The EIA forecasts a decline in U.S. gas production in 2024 as drilling activities slow down following a significant drop in prices to three-and-a-half-year lows in February and March.

In Appalachia, the largest U.S. shale gas basin covering Pennsylvania, Ohio, and West Virginia, production is expected to decrease to a 13-month low of 35.8 bcfd in June from 36.0 bcfd in May. Despite the overall decline, new gas well production per rig in Appalachia is predicted to rise to a 29-month high of 28.6 million cubic feet per day (mmcfd) in June, marking the 22nd consecutive monthly increase in new well productivity.

The EIA’s report underscores the dynamic nature of U.S. shale production, with significant gains in oil output contrasting with a decline in natural gas production. The trend of rising oil output is expected to continue as long as well productivity remains high and market conditions are favorable. However, natural gas production may face further challenges if prices remain low and drilling activities are curtailed.

In summary, while U.S. oil production from top shale regions is poised for significant growth, the natural gas sector is experiencing a downturn, reflecting the complex and fluctuating landscape of the energy industry.

This article is part of Daily Market News & Insights


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