Drilling Activity in Shale Is Falling
According to Reuters, oil and gas development in the United States is showing further signs of leveling off with the prospect of a decline as a result of falling energy prices (from a peak of $124 per barrel of oil recorded in June 2022).
The drop in oil prices has eliminated incentives to increase recoverable volumes and prompted companies engaged in exploration and production in the United States to focus on improving efficiency.The number of drilling rigs at oil assets decreased to 479 in July 2024, which is significantly lower than the figure of 534 drilling rigs a year earlier and the peak value of 623 drilling rigs recorded in December 2022. Over the same period, the number of drilling rigs, primarily for gas production, decreased even more sharply (to 100 in July this year from a peak of 162 in September 2022), which led to a decrease in the growth of condensate extracted from gas wells. A decrease in production will eventually lead to depletion of reserves and push prices up again.
As a result, low prices and a slowdown in shale production in the United States create conditions for Saudi Arabia and its partners under the OPEC+ agreement to increase production and try to regain market share previously won by the United States in 2024-2025. However, traders are concerned about the slowdown in economic growth and the associated slowdown in oil consumption growth on a global scale.
