BAKU, Azerbaijan, Dec.9. Fitch Solutions is forecasting strong growth in US shale, fuelling a 5.9 percent y-o-y increase in total US oil production in 2023, up from 5.4 percent in 2022, Trend reports with reference to the company.
“That said, growth will be somewhat constrained by ongoing cost pressures in the shale patch, which are eroding profitability. The larger and listed producers are maintaining strict financial discipline, prioritising value over volume and recycling excess revenues into shareholder distributions and debt repayments,” reads a report released by Fitch Solutions.
While the company expects capex to rise strongly in 2023, it will remain far below previous historic highs, while local cost inflation will soak up a significant chunk of the forecast growth.
“Given these headwinds, we are likely to make a downward revision to our production forecast this quarter, although the decrease will be relatively limited in absolute terms. Strategic storage releases are also slowing. In March 2022, President Biden announced that the US would release 180mn bbl from storage, to help plug the global market deficit. The final 15mn bbl are scheduled to reach the market in December. The Department of Energy (DoE) stands ready to release additional volumes, if needed to offset Russian export losses or other supply disruptions. However, the drawdown in 2023 will likely be substantially lower than seen this year, while the DoE already has plans in place to restock inventories, once WTI is consistently averaging above USD70/bbl.”
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