Shale CEO Says Oil Markets Are in for Bearish Crude-Supply Flood
(Bloomberg) -- The largest independent Permian Basin oil driller is warning of a bearish influx of crude supplies to global markets in coming months.
In preparation, Diamondback Energy Inc. is cutting $100 million in capital spending, narrowing its output forecast and delaying some fracking work. The moves announced Monday by Chief Executive Officer Kaes Van’t Hof appeared to be defensive in nature and aimed at avoiding the trap of boosting production when there’s a risk of weaker prices in a well-supplied market.
In a letter to investors, Van’t Hof never mentioned the OPEC+ alliance. He didn’t need to, though. The confederation has been jarring oil markets with a series of supply increases despite bleak demand signals that combined to sent US crude down 17% since mid-January.
“The projected increase in global oil supply in the second half of this year is hard to ignore,” the CEO wrote. “Therefore, we have set up our business for the rest of 2025 to hold oil volumes flat while cutting” spending.
The outlook from one of the industry’s most prominent producers follows on the heels of its May forecast that declared US shale-oil production had peaked. Since then, domestic crude drilling activity has dropped by 12% to the lowest in almost four years.
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