Oil production from the seven most prolific U.S. fields will expand at the slowest pace in nine months in February as drillers curb spending in response to the lowest crude prices in five and a half years, a U.S. government forecast shows, Bloomberg reported Jan. 12.
Output from the seven regions, which account for 95% of the nation’s oil production growth, will rise 103,000 barrels a day (bbl/d) to 5.52 million, the smallest gain on a percentage basis since May, the U.S. Energy Information Administration (EIA) said in its drilling productivity report Jan. 12. The 1.9% projection compares with a 3.4% gain in the same month last year and a 4% increase in 2013.
U.S. oil production growth is slowing as plunging prices force the country’s crude explorers to scale back capital budgets and idle the most drilling rigs in more than two decades. Escalating competition from OPEC and the rest of the world’s suppliers threatens to halt the shale-drilling boom that propelled U.S. output to the highest level since at least 1983.
“It’s a data point you have to give weight after the rig count saw the sharpest drop since 1991,” Thomas Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC, said by telephone Jan. 12. “These are the early signs that production might start to crest if not start to fall.”
The U.S. benchmark West Texas Intermediate oil for February delivery declined $2.29 to $46.07/bbl on the New York Mercantile Exchange. It was the lowest settlement since April 20, 2009.
Bakken, Permian
Growth in North Dakota’s Bakken formation will slow to 1.86% in February, reaching 1.31 MMbbl/d, the EIA’s report shows. The rate of expansion in the Permian Basin of Texas and New Mexico, the largest U.S. oil field, is expected to slip to 2.2% to total 1.93 MMbbl/d.
Output in Texas’s Eagle Ford formation will rise 1.5% to 1.72 MMbb/d, down from a 1.8% gain in January.
U.S. oil drillers pulled 61 rigs out of fields last week, the biggest decline since February 1991, which also followed a tumble in prices before the start of the Persian Gulf War, data compiled by Baker Hughes Inc. (NYSE: BHI) show.
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