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US shale oil production may rise again

Reuters is reporting that, according to some company executives, US production of shale oil, which accounts for more than 70% of the country’s oil production, may start rising again soon.

Shale operators cut production after the COVID-19 pandemic triggered a drastic drop in demand and even caused oil prices to briefly go negative. Since then, they have been remarkably disciplined in holding back production, even as oil prices have recovered significantly. The latest figures from the US Department of Energy estimate US oil production at 11.5 million barrels per day (bpd), which is still some way off the 13 million bpd that was seen before the pandemic.

The production increase is expected to be led by larger companies, especially those with operations in the prolific Permian Basin. Chevron, Exxon Mobil and BP, which all also make industrial lubricants like spindle and slideway oil, are all either intending to raise output or increase spending on shale assets. There has also been pressure from the White House to increase oil production to relieve the tight markets that have caused oil prices to rise above $80 per barrel.

Exxon Mobil already grew its shale production by 30% last quarter, and its CEO said it could add a further two drilling rigs. Chevron also said it could add another two rigs this quarter, while BP has announced a further $500 million of spending on its shale assets.

Not everyone is convinced about raising production, however, with Diamondback Energy committed to maintaining current levels of production next year.

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