New York – American oil production is approaching record levels again, led by shale projects, potentially foiling efforts by OPEC to support prices.
Oil prices were boosted this week after Saudi Arabia and Russia signaled they intend to extend an agreement to limit output. That raised expectations the Organization of the Petroleum Exporting Countries will sign off on prolonging the existing production agreement at its May 25 meeting.
Petroleum exporters’ efforts to push prices higher have helped American producers as well, especially shale producers who can react quickly to market developments.Oil prices currently trade between $45 and $55 a barrel, up from $26 a barrel in February 2016.
American shale has been particularly responsive to the higher price range because it is less capital intensive than other ventures.
“With respect to shale oil, the investment decisions and cycles are shorter because it only takes a month to drill and bring a well online,” said Ben Shattuck of Wood Mackenzie.