The U.S. remained the world’s largest producer of petroleum and natural gas in 2015, but production is headed downward this year and in 2017, the U.S. Energy Information Administration (EIA) said May 23.

Despite the crushing drop in prices in 2015 and a 60% drop in the number of operating oil and natural gas rigs, U.S. petroleum supply still increased by 1 million barrels per day (MMbbl/d) in 2015 and gas production increased by 3.7 billion cubic feet per day (Bcf/d).

What’s next? The latest projections on production, exploration, prices and supply painted a complicated industry outlook that, if only one thing is certain, will inevitably change. Generally, various agencies and analysts forecast oil prices to trend up, supplies to vary and exploration to suffer.

The EIA’s own estimates are for crude oil production to decline by 1.6 MMbbl/d by the third quarter of 2017 from the high set in April 2015.

Prices should continue to build through 2020 to a range of $50/bbl to$60/bbl, Goldman Sachs analyst Brian Singer said. The firm bumped up its oil price assumptions for the next six months, as supply disruptions and greater demand could lead to a sharper reduction of inventories in economically developed countries.

“While the more positive 2016 is offset by moderated forecasts for 2017, we still see oil prices rising to the upper end of our $50-$60 range next year,” Singer said in a May 20 report.

The critical question for U.S. energy equities is whether the world needs U.S. shale to grow, Singer said.

“While the answer for 2016 is no, we believe the answer for 2017-20 is yes” — at a clip of 0.7 MMbbl/d-0.9 MMbbl/d annually, he said. “The need for U.S. oil growth leaves us, long-term, constructive on shale scale/productivity leaders.”

First order of business: lower breakeven points for producers. The Permian Basin and the Scoop/Stack plays of Oklahoma should blaze the trail to new lows.

“Productivity improvements across the major shale plays remain broadly in line with our estimates,” Singer said. “We continue to expect productivity gains of this magnitude through 2020, which we believe will push average breakevens for shale plays below $50/bbl of WTI.”

However the gap between what Singer called “winners” and others is expected to continue widening.

Goldman Sachs has Buy ratings on shale productivity winners including EOG Resources (NYSE: EOG), Diamondback Energy (NASDAQ: FANG), PDC Energy (NASDAQ: PDCE), Pioneer Natural Resources Co. (NYSE: PXD) and RSP Permian Inc. (NYSE: RSPP).

Those companies will sit in the catbird seat while steadily rising prices into 2018 should keep lower-rung operators in business, Singer said.

However, a sharp uptick in U.S. supply response is possible given access to capital markets, productivity improvement and higher oil prices. The tricky part will be knowing when to stop.

“Higher-than-expected U.S. oil production without a corresponding increase in oil demand or decrease in oil supply outside the U.S. would risk keeping 2018 oil prices below our $60 per barrel forecast,” Singer said.

Shale still faces competition as costs fall, including from legacy areas that have been underfunded.

The volumes and short lead time of shale production have prompted some OPEC producers, such as Saudi Arabia, to shift toward production growth. Around the globe, there are multiple legacy areas that could compete for development dollars.

“We believe onshore expansion globally will be governed by four forces: capital, policy, currency weakness and productivity,” Singer said.

Eventually, prices could rise simply because no one is looking for a new source of oil.

Oil discoveries reached an 8-year low in 2015, according to a May 4 report by Richmond Energy Partners (REP). In 2016, global exploration drilling is forecast to be down 73% compared with 2014.

“Industry has responded to the downturn by slashing exploration budgets by over 70% on average. Sustained oil prices above $60 per barrel are needed to stimulate exploration,” Keith Myers, managing director of REP, said. “The geology that is economic to explore at $40/bbl is actually quite limited.”

In a report published May 4—the seventh annual “State of Exploration” report--REP said that commercial oil discoveries’ finding costs reached a high of $4.3/bbl of oil, the most since 2007. About $17 billion in frontier drilling spend in a five-year period generated 16 new commercial plays in 12 basins. The commercial success rate of the finds was about 8%.

Darren Barbee can be reached at dbarbee@hartenergy.com.