US shale producers are showing the first signs of strain, with oil prices dropping to their lowest so far this year. The firms are considering stepping back from recent drilling that has resulted in the US rig count rising to a two-year high of 941. Activity has slowed in April-June and could slacken further, reflecting the short-cycle nature of the shale industry, the Federal Reserve Bank of Dallas says in its latest quarterly energy review. The survey samples companies based in the 11th Federal Reserve District, which covers Texas, southern New Mexico and northern Louisiana, collecting data from 70 producers and 68 service providers. The business activity index - the broadest measure of conditions among regional energy firms - has declined to 37.3 from 41.8 in the first quarter, the bank says.
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