U.S. oil production from shale plays is forecast to increase again, jumping 122,000 barrels per day (Mbbl/d) to 5.4 million barrels per day (MMbbl/d) in June, according to the latest drilling productivity report from the U.S. Energy Information Administration (EIA).

Leading the pack is, of course, the Permian, where oil production could reach about 2.5 MMbbl/d, an increase of 71 Mbbl/d from what is expected by the end of May.

Likewise, the future is likely to hold more shale gas production. The report shows shale gas production will increase to about 51.3 billion cubic feet per day (Bcf/d), compared to about 50.8 Bcf/d for May. Most of the gas production is coming from the Marcellus, which is forecast to produce about 19.3 Bcf/d in June—up 22 MMcf/d.

Although the Marcellus produces more than twice that of any other region tracked in the report, other areas are expected to see production gains next month. These, according to the report, include the:

  • Permian, up 169 MMcf/d to about 8.6 Bcf/d;
  • Haynesville, up by 130 MMcf/d to about 6.5 Bcf/d; and
  • Eagle Ford, which could see another 112 MMcf/d in June, pushing its shale gas production total to about 6.1 Bcf/d.

In all, the EIA’s outlook shows an increase in shale oil and gas production in all regions, with the one exception being oil production in the Haynesville, which is expected to hold steady at 45 Mbbl/d in June.

The increases come as U.S. drillers ramp up spending as market conditions appear better than last year when global supply outgrew demand and sparked the downturn, production cuts and a spending slowdown. Oil prices have since rebounded from lows around $26.70/bbl in January 2016 to just more than $54/bbl in late February 2017—due in large part to an OPEC-led initiative to cut production.

However, oil prices have slid recently. On May 18, U.S. crude oil was trading for about $48.52/bbl.

Yet, oil and gas producers seem confident that the forecast for higher crude prices will play out.

Apache Corp. (NYSE: APA), for example, is among the companies that have raised production guidance. Earlier this month, the Houston-based company raised its North American production guidance, now ranging between 256,000 barrels of oil equivalent per day (Mboe/d) and 264 Mboe/d for the year. That’s up slightly from 252 Mboe/d-263 Mboe/d, according to a Reuters report.

More U.S. production could, however, pose challenges for market rebalancing efforts in the near term.

However, looking further ahead, analysts say U.S. shale oil and gas production will be needed to help meet growing demand.

Speaking during the Association of International Petroleum Negotiators’ 2017 International Petroleum Summit in Houston this week, Eurasia Group CEO Robert Johnston said the consultancy sees about 7 MMbbl/d of new supply by 2022. This includes about 5 MMbbl/d of U.S. shale growth, along with another 2 MMbbl/d or so from oil sands and deepwater production.

But by 2022, another 15 MMbbl/d of new supply could be needed as global demand grows about 1 MMbbl/d per year.

RELATED: Supply Shortfall Outlook Swings Focus To Deep Water, Oil Sands

Given the decline rates of shale plays, it may be time to think more about investments in exploration and offshore developments.

Velda Addison can be reached at vaddison@hartenergy.com.