CLAIM: U.S. Shale Is Immune To An Oil Price Crash In 2017.

Shale production has been gaining ‘significant momentum’, and there is a limited downside risk in the short run, Norway-based consultancy Rystad Energy said in a report last week.

Oil production in the Lower 48 excluding the Gulf of Mexico is expected to rise until the end of the year even if the price of oil plunges to US$40, Rystad’s analysis shows.

Since December 2016, oil output in the Lower 48 states, minus the Gulf of Mexico, has been on a continuous expansion, with 430,000 bpd growth so far. The growth from the average level in the fourth quarter of 2016 to May 2017 is around 340,000 bpd, Rystad said.

According to the EIA data, Lower 48 states’ field production of crude oil has been growing each week since early December, right after OPEC said it would curb supply to try to balance the market and lift the price of oil.

Despite the worries that cost inflation may slow down production growth, Rystad believes that completion activity is poised to surge for the rest of this year. At WTI price of US$50 per barrel, Lower 48 output is seen to be growing by an additional 390,000 bpd between May 2017 and December 2017, the consultancy noted.

It all sounds very nice, and frackers have done an impressive job of finding new efficiencies, but claims of immunity or “That can’t happen here” always set off my alarm bells.

Regardless of the fate of individual American suppliers however, “abundant supplies of oil and gas are now a fact of life.”