U.S. shale oil production to grow for years before peaking despite OPEC+ predictions, HSBC reports

(Bloomberg) – U.S. shale drillers will continue to raise oil production for years before the juggernaut stalls around 2028, dashing OPEC+ hopes for a quicker fall-off in American output growth, according to HSBC Holdings Plc.

Improvements in drilling and fracking techniques amid a wave of corporate takeovers will drive the expansion and more than offset recent reductions in rig deployments, analysts at the the London-based bank wrote in a note titled ‘Underestimate U.S. shale at your peril.’

“Some expect U.S. shale to peak soon, and OPEC+ hopes this will be the case as it would allow the group to finally unwind its supply cuts,” analysts led by Kim Fustier wrote. But “US shale could grow for the next 3-4 years.”

Expectations for slower U.S. shale production was a factor in the recent decision by the OPEC and allies to gradually increase supplies by bringing curtailed barrels back to the market. But investors should be wary of “substantial” productivity gains that may extend US growth beyond current forecasts, HSBC wrote.

U.S. shale fields will up production by about 400,000 bpd in the next year, with slower growth thereafter, according to the analysts.