A new report by financial services firm Raymond James concluded that U.S. production growth may have to shrink over the next year and half if oil prices remain low and OPEC continues to reject production cuts.
The report said the 1.5 million barrel per day boost in U.S. production seen since 2013 would have to plummet to nearly zero if supply is to be brought in line with demand.
Last Thursday, OPEC members refused to implement output cuts, sending prices to five year lows.
The report said U.S. producers will be largely responsible for curbing production to bring prices back up if OPEC continues to reject cuts.
With U.S. production hitting thirty year highs thanks to booming shale plays global supply has been outstripping demand, sending prices tumbling by about 40 percent since June.
Weak demand growth forecasts are compounding the supply glut.
In October, Paris-based International Energy Agency projected a 200,000 barrel per day drop in global demand due to weak consumption trends and curbed economic growth in Europe, Asia and India.
Anemic demand and weak prices could put pressure on shale projects as upstreams look to cut costs.
“U.S. shale projects are all on the proverbial chopping block to right-size global production,” Florida based Raymond James said.