for Shale Oil Production
OPEC has few choices at its disposal to manage the swelling oil market surplus, most of which are unpalatable.
Oil majors continue to ratchet up activity in U.S. shale, even as other producers cut back.
U.S. oil exports recently hit new highs with a record number of export destinations, but shale's recent woes mean continued success is not guaranteed.
Production gains cannot mask the problems facing the shale industry, but the offshore sector is seeing an increase in activity.
The top forecasters for the oil market have repeatedly downgraded their estimates for demand. Absent a turnaround in global growth, the pitfalls for the oil market may only grow worse.
U.S. shale is expected to account for nearly three-quarters of global supply growth over the next five years—even as it faces both short- and long-term questions about its viability.
Shale executives have repeatedly proclaimed their commitment to capital discipline, promising not to return to profligate spending in pursuit of growth at all costs. But output is growing sharply, poised to reach 12 Mbd in 2019.
Although they have been caught off guard by U.S. growth, OPEC members and their non-OPEC partners have successfully regrouped and will likely be well positioned if fundamentals eventually tighten even more.
Total capital and exploration spending on global oil and gas will likely bottom out in 2018, and investment may not recover to levels seen before the 2014 market downturn until the mid-2020s.
In the shale patch, rig productivity is falling, companies are no longer making headway on drilling times, and cash flow continues to disappoint investors.