US shale oil producers are expected to boost output by the end of June as benchmark prices recovered to around $40/barrel. Analysts expected that the producers would increase production by roughly half a million bpd, restoring a quarter of supply that they curbed since the COVID-19 health crisis ravaged oil demand and prices.
US producers have shut about 2 million bpd ever since. The increased production is expected to complicate OPEC+ efforts to restore the balance in the oil market. Producers mostly reduced production by choking back wells, not shut-in completely. Hence, they can reopen the tap to restore their output.
However, the production increase is not expected to happen over the long term. US producers have slashed capex which weigh on drilling activity. They also cautioned the ongoing coronavirus outbreak in the US and other parts of the world. Some industry executives also said that a price of $40/barrel is not enough for output to resume fully.
