Oil production from several U.S. shale regions is expected to keep on rising in August, the U.S. Energy Information Administration forecast on Monday.
The EIA’s latest drilling productivity report projects that drillers operating the nation’s shale oil fields will increase production by 113,000 barrels a day next month. Total output from these areas is expected to reach 5.59 million barrels a day in August.
July’s report marks the fifth straight month the agency’s growth forecast came in above 100,000 barrels a day. The forecast is the latest sign that U.S. drillers continue to pump more even as benchmark U.S. West Texas Intermediate crude futures remain stuck in a range below $50 barrel.
Oil prices are down about 14 percent this year, but the commodity was on an upswing through the first quarter of the year, boosted by production cuts by OPEC and other exporters. That allowed U.S. drillers to lock in higher prices for future delivery, providing the financial incentive to produce more.
U.S. shale drillers rely on expensive drilling methods such as hydraulic fracturing to extract oil and gas from rock formations.
The Permian basin in Texas and New Mexico is once again projected to see the largest growth in August. EIA forecast drillers there will hike output by 64,000 barrels a day.
The Eagle Ford shale in eastern Texas has consistently come in second place. In August, EIA sees the region’s production growing by 27,000 barrels a day.
Rocky Mountain drillers are expected to raise production by 15,000 barrels a day in the Niobrara region, contributing to a slow but steady recovery in Colorado’s oil patch. North Dakota’s Bakken will also see a bump of 4,000 barrels a day in August, EIA forecast.
Total U.S. output has risen from about 8.5 million barrels a day in September to roughly 9.4 million barrels a day this month. The pace of the recovery has taken the market by surprise.
Goldman Sachs warned this month that oil prices could fall below $40a barrel if investors do not see evidence that U.S. production is leveling off.