US Lower 48 oil supply questions, answered Report

Insight 20 May 2020

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Report summary

A crucial part of the shift from massive oversupply to balance in the market rests on the response in the US Lower 48 to low prices. Along with the OPEC+ production cuts, the sharp fall in US onshore production in tight oil areas is helping tighten the supply and demand balance. Since the release of the Macro Oils short-term outlook for May early this month, we have had questions from clients on the trends in the Lower 48. In this Insight, we gathered these questions and present them in a Q&A format that addresses the changing state of oil supply from the US Lower 48. Topics include: -Production decline – what is driving it? -Shut-ins –how long will they last? -Recovery – what conditions are needed to reverse the decline -Outlook for 2021 –assumptions for investment and production

1. How much will production fall and what’s driving that decline?
2. How much will be shut-in and how long will shut-ins last?
3. What about 2021? Will we see investment increase? Will production continue to decline?
4. What conditions are needed to see a recovery?
5. Will Lower 48 oil grow again?