A shortage in the supply of oil has been predicted in the coming months. Lloyd Helms, the chief operating officer at US shale firm EOG Resources, has said that slow growth in US crude oil production combined with production cuts by the OPEC+ group of oil-producing countries will lead to rising oil prices.
Brent Crude has recently been trading at around $73 per barrel, despite a recent drop in US inventories, which usually puts upward pressure on prices. Resilient Russian supply, a slower than expected recovery in the Chinese demand for oil and concerns about a global recession are thought to be holding back oil prices.
Helms countered this while speaking at an energy conference hosted by JP Morgan:
“We are more optimistic about the potential direction of oil prices.”
The US Energy Information Administration (EIA) has forecasted that total US production from companies like ExxonMobil, the maker of the Mobil DTE hydraulic oil, will grow by 6.1% this year, but the increase will slow down to 1.3% in 2024. At the same time, the OPEC+ group have made substantial production cuts, with Saudi Arabia going a step further with a sizeable voluntary cut in July.
Helms said that service and labour shortages meant that his company was not intending to intensify its activities in the Permian Basin, the biggest oil-producing shale region in the US. He said EOG was instead planning to level off in the Permian and move its focus to developing prospects at the Utica shale play in Ohio and Wyoming’s Powder River Basin.