US oil production set to fall heavily

The latest data from the US Energy Information Administration (EIA) suggests that US crude oil production has reached a turning point. 

Weekly data released on 22 April showed the third output decline in the past four weeks. At 9.366 million barrels per day (mb/d), US crude oil output is now 66 thousand barrels per days (kb/d) less than the peak reached on 20 March 2015. 

Low prices have generated a collapse in drilling, which has reduced output from new wells in shale oil areas to below the level needed to match the very high natural decline rate of existing wells. 

The EIA's latest projection is that US shale oil will fall 57kb/d m/m in May. 

"We expect the rate of decline to quicken thereafter. Unless prices rise sharply in coming months, we expect US shale oil to be 1mb/d lower (y/y) by May 2016", says Standard Chartered.