US oil drilling has begun to fall sharply. The speed of the fall in activity has been particularly marked in the four tight oil (aka shale oil) regions (Bakken, Eagle Ford, Niobrara and the Permian). Standard Chartered Global Research team estimates:
- We expect this fall to continue apace throughout Q1, unless there is an unexpectedly early move up in oil prices.
- Our estimate is that the m/m growth in US tight oil will become negative in Q2 if the current rate of decline continues through to the end of Q1. At that point the m/m contribution from new tight oil wells (currently 400 kb/d) would no longer match the m/m fall from old wells (currently 300 kb/d), and net growth would likely become negative.
- This December-to-date, drilling activity in the tight oil regions has fallen by 45 rigs, a sharp acceleration of the 8 rigs fall in November. If the pace of December’s fall were maintained, then the total in the four regions would stand at about 850 rigs at the end of Q1.
The material has been provided by InstaForex Company – www.instaforex.com