The U.S. shale market’s growth rate peaked last year, as per a survey of major forecasters, cooled by investors asking for financial returns over the surging oil output.
Nearly 1.3 million barrels per day (bpd) of new U.S. shale oil should come to the market this year, compared to the approximately 1.5 million new bpd that was recorded in 2018, as per the average of recent forecasts from the U.S. government and several energy research firms.
The slow shale progress could permit the Organization of the Petroleum Exporting Countries and allies, which have been reducing 1.2 million bpd since January to curb an oil glut, to avoid worsening their cuts when they meet this week. However, it also increases the pressure on the struggling oilfield services organizations, who are wishing that shale producers escalate their drilling budgets.
Abundant supplies and investor demand to control spending on fresh production has affected shale suppliers. The pricing for oil field services will remain “under stress,” as per the credit rating firm, Moody’s Investors Service.
A senior director at Drillinginfo, Brian Lidsky said that no publicly traded exploration and production business had issued shares this year and the bond market issuance for those organizations is slated for a decade-low offering.
“It’s a new paradigm” following a decade of easy capital, Lidsky said, adding that a lowering growth rate “does help the global oil supply-demand balance. It does help support prices”