US oil production is set to shoot higher, as shale producers eyeing Opec’s move to support prices are poised to reactivate wells only a few weeks after shutting them. Output could rise about 2m barrels a day, or 20 per cent, between now and the end of August as the bulk of the supply shut down during the recent price crash is brought back on stream, according to analysts. But the rise in output will be shortlived as operators’ deep spending cuts hit drilling activity later in the year. It will nonetheless trigger alarm among Opec and its allies such as Russia, which are expected on Saturday to extend supply cuts agreed in April. “In its bid to balance the market, Opec has perhaps again forgotten that shale plays by its own rules,” said Jamie Webster, a director at the BCG Center for Energy Impact.
This week, large independent producers in Texas’s Permian shale field including EOG, Parsley Energy and WPX Energy indicated they were bringing curtailed volumes back online. Matt Gallagher, Parsley’s chief executive, said his company was adapting to “changing market dynamics” and would restore most of the 26,000 barrels a day it cut in May. But he said new drilling would remain suspended. WPX and EOG have shut in 30,000 and85,000 b/dof output respectively, but both said they had begun bringing some of this back online. Saudi Arabia and Russia agreed to curb output under pressure from US President Donald Trump after a price war between them threatened to destroy the US shale sector. The cuts, which began in May, were made on the understanding that US production would fall steeply.