US shale oil output to drop 68,000 bpd to 7.64 million bpd in October: EIA

US oil output from seven major shale formations is expected to decline by about 68,000 bpd in October to 7.64 mn bpd, the US Energy Information Administration said

NEW YORK (Reuters) - U.S. oil output from seven major shale formations is expected to decline by about 68,000 barrels per day (bpd) in October to 7.64 million bpd, the U.S. Energy Information Administration (EIA) said in its monthly productivity report on Monday.

That would be the first decline in production since May, according to revised data from the agency.

Output at every formation is expected to fall in October, except the Permian basin of Texas and New Mexico, where production is expected to rise by about 23,000 bpd to 4.17 million bpd, the data showed. That would be the smallest increase since production declined in May, the data showed.

The biggest decline is expected to come from the Eagle Ford basin in South Texas, where output is expected to fall by nearly 28,000 bpd to 1.13 million bpd.

U.S. oil prices are still down about 40% from the peak at the start of the year, due to coronavirus demand destruction.

However, U.S. crude futures have gained almost 100% over the past five months to around $37 a barrel, mostly on hopes global economies and energy demand will snap back as governments lift lockdowns.

Analysts said those higher oil prices have encouraged some energy firms to start adding rigs, an early indicator of future output, in recent weeks.

Separately, the EIA projected U.S. natural gas output would decline for a second month in a row to 80.6 billion cubic feet per day (bcfd) in October.

That would be down over 0.4 bcfd from its forecast for September. Output from the big shale fields hit a monthly all-time high of 86.8 bcfd in November.

Output in Appalachia, the biggest U.S. shale gas formation, was set to slip for a third month in a row in October to 32.8 bcfd, down about 0.2 bcfd from September.

 

(Reporting by Devika Krishna Kumar and Scott DiSavino in New York; Editing by Chizu Nomiyama and Marguerita Choy)