The nation’s oil production is set to drop less than expected this year as drillers in West Texas and Oklahoma find ways to pump crude faster, and for less money, Goldman Sachs says.
As FuelFix.com reports, the investment bank revised its forecast downward on Monday, saying U.S. crude output should fall by 650,000 barrels a day this year. A previous forecast pegged the decline at 725,000 barrels a day.
It’s not a large adjustment, and it doesn’t change Goldman’s opinion that falling domestic crude production will help lift energy prices over the next few months by realigning oil supply and demand after a two-year glut.
But it’s a sign U.S. drillers are still pushing back against the sharp natural declines across shale plays in Texas and elsewhere, and that they could get an assist from the recent rally in crude prices.
And the fact that oil prices are rising in the face of resilient shale output and higher-than-expected production out of Iran shows global demand is stronger than many believe, and production is falling off elsewhere, Goldman says.
“Signs the world will need a restart of the shale machine remains a potential positive catalyst for oil (companies) despite the recent rally,” Goldman analysts write in the latest forecast.
One place crude production is falling is Canada, which has suffered an output loss of 1 million barrels a day as wildfires continue to rage across the country.
If Canadian oil sands producers are able to begin pumping oil again by the end of the week, Goldman says, an average 650,000 barrels a day of oil production could be lost over three weeks as facilities are ramped back up.
That’s about 14 million barrels, Goldman estimates, and while that’s a big number, it wouldn’t disrupt North American crude inventories much, as U.S. storage tanks have some 543 million barrels of oil sloshing around, near record levels.
