Oil production from the top seven shale regions in the U.S. is set to tumble to levels not seen since 2018 as drillers scale back in response to the recent price collapse, the Energy Information Administration said.
Crude output from seven major shale formations expected to fall by a record 197,000 barrels per day in June to 7.822 million barrels per day. That would be the lowest since August 2018, according to the U.S. body.
At present, a total of 117 VLCCs – each capable of shipping 2 million barrels of oil – are travelling to China for unloading at its ports between the middle of May and the middle of August. If those supertankers transport standard-size crude oil cargoes, it could mean that China expects at least 230m barrels of oil over the next three months, according to Bloomberg.
Demand may be returning somewhat, but there is still a huge backlog of crude seeking to find a home. The OPEC cuts and the US drop in production will help to clear this but there is still a long way to go until we get to any sort of equilibrium again.