In the month of February, the Organization of Petroleum Exporting Countries (OPEC) indicated a cut in its 2021 forecast for US shale oil, which expects a decline in production by 140,000 barrels per day lowering the total amount to 7.16 million bpd. In March, this number is expected to drop once again by 78,000 bpd to 7.5 million bpd. The forecast precedes the significant drop of temperatures witnessed in Texas which alone represents 40 percent of US output.
The Chief Executive of the Chesapeake Energy Corporation Doug Lawler stated in an interview that more discipline and responsibility with respect to the generation of cash for stakeholders and shareholders is required in the mindset needed for this new era.
This development is well received by OPEC which had uncomfortably experienced a price slide and global glut partially caused by rising shale output between 2014 and 2016. In the midst of this, OPEC+ was formed, which began to cut shale output from 2017 onwards. Later, with the rise of the COVID-19 pandemic and the consequent drop in demand and prices, OPEC+ slowly began the process of slowly unwinding record output curbs made last year. Members of OPEC+ will conduct a meeting on 4 March in order to review demand.
Severe colds experienced last week will seriously harm oil and gas production as frozen equipment and a lack of power to conduct operations have to be dealt with by respective companies, where ConocoPhillips, the US’ largest independent producer of crude oil and natural gas, announced the majority of its production located in Texas remains offline, on Thursday.