While shale drilling in the U.S. is on the rise again, prices need to climb nearer to $60/bbl for U.S. producers to have a “substantial” boost in activity, the International Energy Agency said.
Producers remain “cautious on outlook,” and further drilling increases this year may be “limited,” the IEA said in its monthly report.
Drillers hired more rigs this year as U.S. oil prices staged a rally that saw futures close at $51.23/bbl in June, the highest so far this year. There were 381 active rigs as of Aug. 5, the highest number since March 18, according to Baker Hughes Inc. data. That number remains more than 75% below the October 2014 peak, the IEA said.
Despite the gains in the rig count, the IEA reiterated its view that shale oil production will decline by half a million barrels a day this year with a further drop of 200,000 bpd next year. The number of completed wells will drop by half this year compared with last year, it said.
U.S. oil production has dropped 12% to 8.445 MMbpd from a record 9.61 MMbpd in June last year, according to data from the Energy Information Administration.