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Business News/ Industry / Energy/  OPEC sees US oil output falling for first time in eight years
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OPEC sees US oil output falling for first time in eight years

The smaller drillers in the US had to shut down rigs after being unable to cope up with the low oil price scenario triggered by global over production

Production is forecast to decline in four out of seven major crude producing US shale plays in October, according to EIA data. Photo: Brittany Sowacke/BloombergPremium
Production is forecast to decline in four out of seven major crude producing US shale plays in October, according to EIA data. Photo: Brittany Sowacke/Bloomberg

US oil production is projected to decrease in 2016 for the first time in eight years, according to OPEC.

Total output of crude and natural gas liquids is forecast to fall 0.5% to 12.47 million barrels a day next year, the Organization of Petroleum Exporting Countries (OPEC) said in its monthly market report on Monday. The decline is being driven by the fall in prices, which has curbed spending, OPEC said. US oil drillers have idled more than half the nation’s rigs since last October, data from oilfield-services company Baker Hughes Inc. shows.

“What happens with shale production next year is highly uncertain," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. “Recent reports on drilling and production justify a pessimistic forecast. It’s not surprising that OPEC would take this view."

US weekly crude output in August and September was down about 330,000 barrels a day from June and July, according to US Energy Information Administration (EIA) data cited in the OPEC report. If not for new capacity coming online in the Gulf of Mexico, the decline would have been bigger.

The decrease in oil output is forecast to continue this quarter and is concentrated in shale plays. Production is forecast to decline in four out of seven major US shale plays in October, according to EIA data.

Crude oil production in the US “is expected to continue to decline through next August and then begin rising in late 2016," EIA administrator Adam Sieminski said in an e-mailed statement on 6 October. Bloomberg

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Published: 13 Oct 2015, 05:47 PM IST
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