OPEC officials heard from industry experts that US oil output growth will likely remain limited in 2021 despite rising prices, OPEC sources said, giving it more power to manage the market in the short term before a potentially strong rise in shale output in 2022.
Officials from OPEC’s Economic Commission Board (ECB) and external presenters attended a meeting on Tuesday focused on US output, the sources said. OPEC heard from more forecasters on the outlook for 2021 and 2022 at a separate meeting on Thursday.
While there was general agreement on limited US supply growth this year, an industry source said for 2022 forecasts ranged from growth of 500,000 bpd to 1.3 million bpd.
“The general sentiment regarding shale was it will come back as prices go up but not super fast,” said a source at one of the companies that provided forecasts to OPEC.
US shale oil output usually responds rapidly to price signals and US crude has this week hit its highest since October 2018 at nearly $73 a barrel. But US producers are still focusing on capital discipline and investor returns, rather than expanding supply, the ECB heard.
“Investment discipline and free cash flow for the investor,” said one OPEC+ source on condition of anonymity, summarising one of the ECB meeting’s talking points. The ECB advises OPEC ministers and does not set policy.