September 18, 2018 / 6:41 PM / a month ago

Top U.S. shale field's output to rise at slowest pace since late 2016

Sept 18 (Reuters) - Oil production in the biggest U.S. shale field will rise next month at the lowest level since late 2016 as transport limits erode gains, U.S. government data this week showed.

Operators will pump an additional 31,000 barrels per day (bpd) in October in the Permian Basin of West Texas and New Mexico, bringing its output to 3.46 million bpd, according to the Energy Information Administration.

Meanwhile, the number of drilled-but-uncompleted wells in the Permian will rise by 211 to 3,630, the largest monthly increase since the EIA began tracking the data in September 2016. Uncompleted wells are those not connected to a pipeline.

Slower production growth helped firm prices of West Texas Intermediate at Midland WTC-WTM on Tuesday, trading as strong as a $10.50 per barrel discount to U.S. crude futures, the highest since Aug. 10.

Transport constraints will continue to overshadow the Permian’s crude production growth, keeping Midland grades at a steep discount to WTI, traders said. WTI Midland hit a six-year low last month.

The differential recently contracted ahead of a deadline for shippers to nominate pipeline volumes, accelerating crude purchases.

“With differentials being so wide, they’d have to take off a lot of production” to affect Midland spot prices, a trader said. “Really it comes down to the pipelines.” (Reporting by Collin Eaton; Editing by Cynthia Osterman)

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