The oil production in the United States is down for seven consecutive months and now dropped below nine million barrels per day for the first time in two years, according to CNN Money report.
Ongoing supply from Saudi Arabia, Iran, and other OPEC nation means the world is still awash in oil. That is forcing American shale companies to continue with cutbacks. Although the price of oil has recovered from its lows, it is still under $50 a barrel, not enough for many of these companies to make a profit due to high production costs.
The production is still twice the level of 2008. Goldman Sachs predicts that it will continue to decline, but will rise again in 2017 as oil prices are expected to recover further.
“Reacceleration of U.S. oil production may be gradual initially, but the world will still need U.S. shale longer-term,” says Goldman Sachs analyst.
Presently, the United States holds over 260 billion barrels of oil in reserves, more than Saudi Arabia, or any other country. However, there are some American companies, such as Pioneer Natural Resources and RSP Permian, that are comfortable with oil near $50, and are increasing production.
This may keep oil from rising further, which is good news for consumers as gasoline is still relatively cheap now. When it comes to oil investors, they may need to wait a bit longer.