HOUSTON, June 8 (Reuters) – Global demand for crude oil is continuing to rise but supply growth remains limited, which will lead to higher prices later this year, said an executive at Pioneer Natural Resources(PXD.N), the third-largest producer in the top U.S. shale basin.
The U.S. oil industry’s output has been capped by higher labor and materials costs that have squeezed profit margins and investor demands to limit spending, Pioneer Executive Vice President Beth McDonald said on Thursday in an interview at the RBN Energy crude export conference in Houston.
Global oil futures were trading on Thursday at about $76.50 per barrel after theOPEC+ group of major oil producers agreedon Sunday to maintain existing production cuts through the end of 2024 and Saudi Arabia said it would cut 1 million barrels from its June output.
“That squeeze in the margin is really keeping U.S. E&Ps (exploration and production companies) from moving forward in a significant way” despite the OPEC moves, McDonald said.
“In general, you’ll still see those modest (production) growth rates and those low reinvestment rates because we continue to focus on returning cash to shareholders,” she said.
U.S. shale oil production has inched higher this year, with June output in the seven top shale basins forecast to be 9.33 million barrels per day (bpd), compared to about 9.3 million bpd in January.
Oil should trade between $70 per barrel and $100 per barrel over the next three to five years in the wake of the OPEC+ moves, McDonald said, adding that prices recently have been driven by demand losses in China and recessionary fears in Western economies.
REUTERS