Experts in the oil industry warned yesterday of a dramatic fall in the US crude output that could make prices soar if demand goes up. During a meeting at the Oil and Money conference in London, an annual gathering of senior oil industry executives, analysts said that global crude prices were now too low to support US shale oil production.
Mark Papa, a partner at the US energy investment company Riverstone Holdings LLC., commented that the industry was “about to see a pretty dramatic decline in US production growth”. Mr Papa further added that American oil output would stall this month and start falling from early 2016. He cited a lack of bank financing for new shale developments as the main reason behind this development.
Official figures suggest that the US production already began to decline after it had reached its peak in April at 9.6 million barrels per day (bpd). Until 2015, the country’s nationwide output was growing at a record rate, which added around 1 million bpd of new supply annually. The rise was possible thanks to the adoption of new drilling technologies that have helped release crude and gas from shale formations.
As to next year, the US Energy Information Administration predicted yesterday (6 October) that production would reach a low of around 8.6 million bpd in 2016. As a result of the global oversupply, oil prices went down by approximately 50 percent in the last year, the development, which only deepened when the Organization of the Petroleum Exporting Countries (OPEC) decided to stick to its strategy not to cut its output and protect its market share.