OPEC and US oil companies see limited rebound in shale oil supply

FILE PHOTO. Oil pumps run at dusk in Midland, Texas, USA. February 11, 2019. REUTERS / Nick Oxford

Por Alex Lawler y Jennifer Hiller

LONDON / HOUSTON, Feb 22 (Reuters) – OPEC and US oil companies see a limited rebound in shale oil supplies this year, as the country’s top producers freeze pumping despite rising prices, a decision that it would help the cartel and its allies.

OPEC said this month that it expects US shale production to decline 140,000 barrels a day to 7.16 million bpd. The cartel’s forecast was prior to the cold wave that affects Texas, where 40% of US production is found, which has closed wells and slowed demand from regional refineries.

The lack of a rebound in shale production could make it easier for OPEC and its allies to manage the market, according to OPEC sources. “I don’t think this factor is permanent,” said one of the sources.

Although some US energy companies have increased drilling, production is expected to remain under pressure as companies cut expenses to reduce debt and boost shareholder profitability.

OPEC + is reversing record pumping cuts made last year, when prices and demand plummeted due to the coronavirus pandemic. Members of the cartel will meet on March 4 to review the lawsuit.

“US shale has been the key supply outside of OPEC for the last 10 years or more,” said another OPEC delegate. “If that growth limitation is expected now, I do not foresee any concerns, as producers in other countries can meet any growth in demand.”

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Still, OPEC is in no rush to turn on the taps. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said on February 17 that oil producers must remain “extremely cautious.”

(Reporting by Alex Lawler in London and Jennifer Hiller in Houston. Edited in Spanish by Javier Leira)

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