NEW YORK (Reuters) - U.S. oil output from seven major shale formations is expected to fall to near a two-year low of 7.63 million barrels per day by July, the U.S. Energy Information Administration said on Monday.
Output is expected to fall in every formation, as producers retrench after prices crashed in April, with U.S. futures plunging as low as negative-$40 a barrel as the coronavirus pandemic slammed fuel demand.
Overall spending is expected to fall by 35%. The number of active U.S. drilling rigs recently hit a record low, and output is expected to decline by 91,000 bpd in July.
Production in the Permian basin of Texas and New Mexico is expected to fall for the fourth straight month, slipping to 4.26 million bpd, lowest since May 2019.
The Permian is among the lowest-cost U.S. oil plays. Fracking technology fueled a boom there that led the United States to become the world’s largest oil producer.
The U.S. oil and gas rig count, an early indicator of future output, fell to an all-time low of 279 in the week to June 12, according to energy services firm Baker Hughes Co dating to 1940. [nL1N2DO1P8]
The biggest declines in July are expected to come from the Eagle Ford and Anadarko basins, where output is expected to fall by about 28,000 bpd and 26,000 bpd respectively.
The number of wells drilled and completed fell to their lowest levels on record, according to EIA data going back to January 2014.
EIA said producers drilled 428 wells and completed 461 in the biggest shale basins in May. That left total drilled but uncompleted (DUC) wells down 33 to 7,591, the 12th consecutive monthly decline.
Separately, EIA projected U.S. natural gas output would decline for a fourth straight month to 80.6 billion cubic feet per day (bcfd) in July.
Reporting by Devika Krishna Kumar and Scott DiSavino in New York; Editing by Chizu Nomiyama, Jonathan Oatis and David Gregorio