May 18, 2020 / 7:55 PM / 2 months ago

U.S. oil output from major shale to drop in June to nearly two-year low

FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

NEW YORK (Reuters) - U.S. crude production from seven major shale formations is expected to fall by a record 197,000 barrels per day in June to 7.822 million bpd, the U.S. Energy Information Administration said in a monthly report on Monday.

The output from shale formations would be the lowest since August 2018, according to data from the agency.

U.S. crude production from shale formations has more than doubled since 2013, lifting the country’s overall oil output to new record highs. Producers have throttled back production since March as prices have crashed due to oversupply and a sharp drop in demand due to the novel coronavirus outbreak.

In June, oil output from shale is expected to drop in each of seven major shale regions, with the largest drop of about 87,000 bpd in the Permian Basin of Texas and New Mexico. In the Permian, the largest producing shale region, production is expected to fall to about 4.29 million bpd.

Separately, EIA projected in its productivity report that U.S. natural gas output would decline for a seventh month in a row to 81.5 billion cubic feet per day (bcfd) in June.

That would be down almost 0.8 bcfd from the agency’s forecast for May. U.S. output from the big shale fields hit a monthly all-time high of 86.3 bcfd in November.

Output in the Appalachia region, the biggest U.S. shale gas formations, was also set to slip for a seventh month in a row in June to 32.6 bcfd, down about 0.1 bcfd from May.

The EIA said producers drilled 718 wells and completed 705 in the biggest shale basins in April. That left total drilled but uncompleted (DUC) wells up 13 to 7,617, their first increase in 11 months.

The number of wells drilled and completed were both at the lowest levels in a month since December 2016.

Reporting By Jessica Resnick-Ault and Scott DiSavino in New York; Editing by Chris Reese, David Gregorio and Richard Chang

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