Oil price collapse at the end of last year, coupled with shareholder pressure, has led to a slowdown in the US shale industry.
EIA released new monthly data on March 29, which showed a decline in production of around 90,000 bpd between December and January, evidence that scissors broke through the breaks after oil prices fell from a rock in the fourth quarter. The decline of 90,000 bps. came after a relatively weak growth of 35,000 bps. a month ago, which was the weakest increase in the month.
But the American shale industry is facing more congestion than just a temporary drop in oil prices. Shareholders have exhausted their patience with unprofitable boreholes and require a high return that tightens screws for less competitive companies and forces spending cuts. More alarming for the industry is the growing recognition of the "parent-child" problem ̵
These obstacles begin to accumulate. Schlumberge and Halliburton, the two largest oil companies, predicted shale drilling would be forced to cut spending by more than 10 percent this year.
The slowdown may put pressure on the oil market, which is already suffering from disruptions in Venezuela, Iran and coordinated redundancies from OPEC +. While stocks in the US surged unexpectedly last week, much of the increase could be subtracted from the Houston ship's disturbances after a major fire in the petrochemical plant.
Indeed, some analysts see a significant decline in stocks over the next few weeks. "The most visible levels of stocks in the world … will be a victim of a powerful combination of supply disruptions in Venezuela, a chemical spill in the Houston canal and accelerating refining," Barclays wrote in a March 29 note. WTI rises to an average of $ 65 a barrel this year. The addition of the bullish impulse is the rather sharp drop of 8 oil platforms last week, the sixth consecutive week of decline. , it is not guaranteed that the delay will last long. Data maker Kayrros says the fall in production will be "short-lived" and there are already signs that industry has recovered over the past few months. "This decline, which tracks past seasonal behavior, follows a dramatic drop in the well measured by Kayrros in December, through a combination of satellite imagery and advanced processing," Kayrros wrote in a report. "But the same patented technologies show that the completion of the products has risen in January and February, preceded by a recovery of production." Indeed, Kayrros says that perimeter production may again exceed expectations this year.
However, the slate pause increases prices. "We expect Brent to enter the range of $ 70-80 a barrel," UBS told Giovanni Staunovo, according to the Wall Street Journal. Related: Reuters: OPEC oil production declines by 2015
At the same time there are other signs of tightening. A Reuters study shows that OPEC production has fallen to a four-year low in March after Saudi Arabia has reduced its requirements and Venezuela has reported deeper loss of supply. Last month, OPEC produced 30.40 mb / d, a drop of 280,000 barrels per day from the previous month. Remarkably, Venezuela has seen 150,000 barrels per day, offline, a volume that will not be easily recovered.
Most importantly, the fears of an economic downturn have been decreasing a little recently. New data from China showed the biggest monthly increase in the Manufacturing Index for Manufacturing Purchases since 2012. In addition, there is hope that US-Chinese trade talks will lead to a breakthrough and tariff cuts, which will erase one of the biggest downside risks to the oil market. barrel and Brent climbed to $ 69 a barrel. "Acquisition of approx. 27%, Brent oil enjoys the strongest start of the year since 2005 in the first quarter, "Commerzbank wrote in a note. Although the bank warns that price rises are somewhat limited, the Brent futures curve has the bullish hue. "The decline in OPEC production reduces supply on the world market.
By Nick Cunningham from Oilprice.com
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