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US Shale Oil Producers Unable to Boost Production

© AP Photo / Hasan JamaliIn response to the high cost of US shale, Saudi Arabia has been selling its massive stockpile of crude oil at rock-bottom prices.
In response to the high cost of US shale, Saudi Arabia has been selling its massive stockpile of crude oil at rock-bottom prices. - Sputnik International
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Dozens of shale oil producers in the United States have cut capital investment on average by half as the slump in oil prices continues, local media reported Tuesday.

Fracking drill rig - Sputnik International
First Shipment of US Shale Gas en Route to Europe
MOSCOW (Sputnik) — Over 30 oil and gas producers in the United States plan to approximately halve their capital spending in 2016, the Wall Street Journal reported, citing its analysis of company financial filings. In the shale oil and gas industry, some 60 percent of fracking equipment has become idle since the start of the oil price downturn, according to the IHS Energy information company, cited by the publication.

"The balance sheets of these shale-only producers have to be repaired for them to get back to drilling… That’s going to curb any recovery," John Hess, the CEO of the Hess Corporation integrated oil company said, as quoted by the journal.

Top US shale oil producers, which have been the sole driving force behind the United States' doubled output between 2009 and 2015, have reportedly announced their intention to cut production in 2016. Overall US oil production has thus been in decline, falling from mid-January's record level of 9.235 million barrels per day to 9.078 million barrels per day by early March, according to the US Energy Information Administration (EIA).

"At $40, I doubt we’re going to see a lot of acceleration," the energy company Oasis Petroleum's president, Taylor Reid, was cited by the WSJ as saying.

Global oil prices plunged from $115 to less than $30 per barrel between June 2014 and January 2016, hitting their lowest levels since 2003 amid an ongoing glut in global oil supply. The prices have since recovered to around $40 per barrel for the Brent crude benchmark. Most estimates of the shale oil break-even price range between $30 and $50 per barrel.

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