The Energy Information Association (EIA) recently issued a crude oil production forecast, citing a forthcoming oversupply of oil amid a substantial decrease in demand for fossil fuels.
Subsequently, the EIA is projecting that shale oil production in the US will be reduced by 8.526 million barrels per day within the next month. This is predominantly due to the growing lack of available capacity at commercial oil storage facilities across the US, which are anticipated to reach maximum capacity by mid-May given a 20 million barrel per day decrease in demand for crude oil.
The EIA is expecting an average decrease of 182,673 barrels per day for the month of May, which will be the second biggest drop in oil production since 2007. The Permian basin, which produces over half of the shale oil in the US, will be reduced to only 4.5 million barrels per day – a decrease of about 75,700 barrels per day. The Eagle Ford, which is the second largest shale oil basin in the US, will be further reduced by 34,790 barrels per day, to only 1.3 million barrels per day in total.
Likewise, natural gas production is also anticipated to decrease in May, with several large-scale basins in the US reducing output to only 83,158 million cubic feet per day – a drop of 869 million cubic feet per day.
Information for this briefing was found via Oil Price and EIA. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.