U.S. shale companies, which profited by continuing to pump oil as the rest of the world cut its production, are again poised to benefit as the Organization of the Petroleum Exporting Countries boosts its output.
OPEC’s decision last week to increase production modestly is seen as an attempt to keep prices elevated without creating a spike. The move eased concerns among the member countries about tightening supply and the potential for a price spike, but it also lifted the stock prices of U.S. oil producers, which have learned to survive at whichever price OPEC pursues.
“We’re not running our business based on what OPEC does regarding supply,” said Doug Lawler, chief executive of Chesapeake Energy Corp., a pioneer of shale drilling. “We just have to respond accordingly and focus on the technology and the innovation that helps us be efficient regardless of the price.”
U.S. production has grown at a record-setting pace this year, hitting 10.9 million barrels a day this month after oil prices exceeded $70 a barrel for the first time since 2014. That makes the U.S. the world’s No. 2 oil producer behind Russia, but ahead of Saudi Arabia.
OPEC members, plus Russia, came to an agreement two years ago to cut production to shrink excess supply and prop up prices. At the meeting last week in Vienna, OPEC ministers cobbled together a dealto reverse course and boost oil output by an effective 600,000 barrels a day to head off a possible run to $100-a-barrel oil. Russia said over the weekend that it would support OPEC’s efforts.
Now U.S. shale companies are again in position to benefit from OPEC’s market-balancing actions.