Here Today Gone Tomorrow

Oil will be looking at the U.S. rig count for further evidence of a shale oil pullback. Zero Hedge reports “On one hand the U.S. shale industry has never had it better: following dramatic technological and efficiency improvements in recent years, U.S. oil output is not only at an all-time high at 11.9MMb/d, but is the highest of any OPEC or non-OPEC nation in the world. Oil production is so high, in fact, that as of October 2018, the U.S. is now energy independent. Alas, this production glut blessing is also a curse, and according to one industry titan, U.S. production growth could slow by as much as half this year. Continental Resources’ Harold Hamm said that shale growth could decline by as much as 50% this year compared to 2018, Oil Price reported. Hamm said that a lot of shale E&Ps are trying to keep spending within cash flow. This newfound mantra of capital discipline has been imposed on the shale industry after a decade or so of a debt-fueled drilling frenzy.

“Producers have become more disciplined in their approach to capex,” Hamm said at the Argus Americas Crude Summit in Houston this week. “Several years back growth was a huge consideration. That consideration has been much less. The peak consideration now has been — are you overspending cash flow? Are you living within cash flow?”

Another shale man, Hess Corporation CEO John Hess thanked OPEC for its help in raising prices, saying that U.S. shale oil producers need help with higher prices and oil price stability.

But still, U.S. oil production Is 23 Years ahead of schedule. Bloomberg News reports that “A year ago, the U.S. government saw American crude production averaging 11.95 million barrels a day in 2042. Shale drillers are set to exceed that this year. The Energy Information Administration now estimates output will top out at 14.53 million barrels a day in 2031, according to its Annual Energy Outlook report released Thursday. Why such a big difference? Near-term prices are higher than what the agency assumed last year, boosting the baseline production, according to the EIA.

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