US shale oil production to jump by 80,000 barrels a day in March, EIA says

Oil prices dip despite OPEC cuts

The pace of the recovery in U.S. shale oil output is set to pick up steam next month as more crude-producing regions return to growth, according to the U.S. Energy Information Administration's latest drilling productivity report.

The EIA forecasts U.S. shale oil production in seven major regions will rise by a total of 80,000 barrels a day to 4.87 million barrels a day in March. This is the third month in a row the agency has projected output to rise.

The increase is nearly double the 41,000-barrels-a-day climb the agency expected for February in its last report. The EIA on Monday slightly raised its forecast for February output to 4.79 million barrels a day.

The Permian Basin in Texas and New Mexico continues to lead the recovery. The EIA sees drillers there increasing output by 70,000 barrels a day in March. The basin's geology allows drillers to produce a barrel of oil at relatively low cost.

The Eagle Ford in southern Texas is seen returning to growth next month with an addition of 14,000 barrels a day. The Niobrara in the Mountain region is also expected to raise output by 15,000 barrels a day.

The anticipated gains in those regions were partially offset by a projected decline of 18,000 barrels a day in North Dakota's Bakken shale.

American shale producers rely on an expensive method of drilling called hydraulic fracturing. They inject a mixture of water, minerals and chemicals into wells at high pressure to break up shale rock and release oil and natural gas.

A more than two-year downturn in oil prices has made it difficult for many frackers to break even on production.

Oil prices have stabilized above $50 a barrel since OPEC and other crude-producing nations agreed last year to cut production by about 1.8 million barrels a day. The higher prices have made more U.S. shale drilling profitable.

Saudi Arabia is over-complying on oil production cuts: Macquarie