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U.S. shale spending cuts loom as majors prioritize debt and buybacks

Oil market supply could tighten, with the International Energy Agency warning the global market is headed toward a 1.8 million barrels per day deficit and U.S. crude production at 13.714 million barrels per day in May.

Reported · Written up by our desk · Energy

U.S. shale oil producers are planning to trim spending despite higher oil prices, aiming to use stronger international benchmarks to reduce debt and support shareholder returns, a move that could weigh on near term production growth.

OilPrice, citing an earlier Bloomberg report, said spending reductions over the first six months of the year are already visible among major shale operators. Chevron and ConocoPhillips spent 10% less during the period, and Occidental cut operations in the Permian by as much as a fifth over the first half of the year, while other companies including APA Corp., HighPeak Energy, and Matador also reduced spending.

The article warns that if the current shareholder first approach persists, production growth from the world’s top oil producing region could slow, even as demand risks a tighter balance. It notes the International Energy Agency projected the global oil market is about to slip into a deficit of 1.8 million barrels daily.

U.S. output remains strong, with the piece pointing to Energy Information Administration data showing U.S. crude production at 13.714 million barrels daily in May. It also said drilling rig counts are rising, with the total 43 rigs higher than a year ago, setting up a potential mismatch between incremental drilling activity and reduced planned spending.

Latest closeWTI crude $82.40 ▲1.4%

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