OPEC: The US shale boom is over

The US shale boom is grinding to a halt.

In its latest monthly oil market report published Monday, the 12-member oil cartel OPEC said US oil producers are finally beginning to feel the squeeze of lower oil prices.

OPEC writes that, “In North America, there are signs that US production has started to respond to reduced investment and activity. Indeed, all eyes are on how quickly US production falls.”

OPEC slashed its forecast for US production in 2015 by 100,000 barrels per day to 13.75mb/d.

Before the oil crash that started mid-2014, OPEC essentially controlled oil prices through its output, increasing or decreasing supply as conditions warranted.

However, more global players have come into the scene in recent years, notably US shale producers that used drilling methods allowing them to drill more cheaply and ramp up production faster. This brought new supply onto the market and is largely seen the as trigger for what sent oil prices tumbling about 60% from last year.

But through the collapse in prices, OPEC has continued to pump oil in a fight to maintain the market share it enjoyed for years. And with this new forecast, OPEC is more or less claiming victory over shale producers in this stage of the oil price war.

OPEC’s new forecast echoes a report Friday from the International Energy Agency, that said low oil prices could bring US oil production to a grinding halt.

The IEA said, “On the face of it, the Saudi-led OPEC strategy to defend market share regardless of price appears to be having the intended effect of driving out costly, ‘inefficient’ production.”

Despite the expected fall in US production, OPEC says America’s oil supply will be higher than any other non-OPEC country’s output in 2015. But for now, it seems OPEC’s tactic to force smaller players out of the market is working.

Here is OPEC’s forecast for US production:

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