On Thursday, September 23, with the resurgence of market risk sentiment, international oil prices rose simultaneously with U.S. stocks. U.S. oil WTI and Brent both rose by more than 1% and broke through $73 and $77 respectively. U.S. oil hit the highest level in August It is at its highest level since the 2nd, with Brent oil hitting its highest level since July 6th.
But some people warned not to be happy too early, as negative factors for oil prices are coming soon. , mainly because U.S. oil production will rise again, and this time the increase will be led by private companies, especially small companies, that are not “controlled” by stock prices and secondary market investors.
The British “Financial Times” quoted Raoul LeBlanc, an analyst at data company IHS Markit, as saying that U.S. crude oil production will “increase rapidly” starting this year, becoming the fastest growing outside of OPEC+ In supplying countries, smaller private producers will account for more than half of total U.S. production growth next year, to at least 400,000 barrels per day, well above the 20% they account for in a typical year.
The oil production of unlisted private small companies in the United States has increased more rapidly. This trend has begun this year. Private companies are leading the growth in the number of oil and natural gas drilling rigs in the United States. The latter total has doubled compared to the same period last year. The above analysts said this is mainly because private companies do not need to comply with the stricter financial discipline required by shareholders like large oil companies.
OilPrice, the U.S. crude oil industry information portal, also wrote last week that a few months ago, when there were serious uncertainties in both price and demand recovery, the U.S. page It seems like a “wandering dream” for rock oil companies to consider increasing production, but now the conditions are different. The recovery in oil demand and the shutdown of offshore production by Hurricane Ida have caused a sharp decline in the inventory of petroleum and its products. The inventory of drilled but uncompleted wells (DUC) in the shale oil and gas industry has also fallen sharply. “This means that as shale As oil producers seek to avoid declining production, we may soon see a significant increase in the U.S. rig count. This also means that shale oil companies may once again come under criticism from investors because drilling requires higher expenditures, which may weaken shareholder returns. .”
According to statistics from oil services company Baker Hughes, which releases a report on U.S. oil and natural gas drilling rigs every Friday, Eastern Time, the number of active oil drilling rigs in the United States during the week of September 17 The number of machines increased by 10 to 411, marking the second consecutive week of increases. Although natural gas drilling rigs have fallen for two weeks in a row, the total number of drilling rigs in the United States has also risen for two weeks in a row, boosted by oil wells, reaching the highest level of 512 in April 2020 (that is, since the epidemic).
As of last week, the total number of active oil and gas drilling rigs in the United States has doubled from 255 a year ago. The number of onshore drilling rigs continues to increase, including 411 oil drilling rigs. Although well below the peak of 1,609 in October 2014, it is still higher than the 179 a year ago. PetroChina’s Permian Basin, which has the largest shale oil and gas production in the United States, has increased its drilling rigs for six consecutive weeks.
The latest data from the U.S. Energy Information Administration (EIA) shows that the average crude oil production in the United States over the past four weeks was slightly Above 11 million barrels per day, an increase of nearly 7% from 10.3 million barrels per day a year ago, U.S. oil production is expected to start rising this fall and reach 12.2 million barrels per day by the end of next year.
The International Energy Agency (IEA) also believes that next year, U.S. shale oil will account for about 60% of the growth in global production excluding OPEC. Bank of America estimates that the United States will add 800,000 barrels per day of crude oil supply in 2022, which will help ease the oil market’s concerns about tight supply. However, the bank still believes that international oil prices will remain above US$70 per barrel next year, and may even soar to US$100 per barrel.
Some analysts pointed out that the resumption of production increase of U.S. shale oil, which has more flexible drilling and production arrangements, may have a “negative impact” on the oil market and oil prices, which will become an unfavorable situation for the industry next year. A major source of certainty and a key factor in reshaping the market: “The resumption of U.S. oil production growth will affect the balance of the world oil market at a time when many are warning of tight supply.”
IHS Markit analyst Raoul LeBlanc believes that as activity increases and drilling costs for some companies rise, expenditures on drilling and putting new wells into production in U.S. onshore shale oil and gas areas will increase from approximately US$65 billion this year to US$65 billion next year. More than 80 billion US dollars, equivalent to an increase of at least 20%. </p
