The U.S. shale industry is slowing down, and a recovery during the rest of 2023 seems increasingly unlikely due to a variety of factors beyond anyone’s control.

From its’ January 14 peak, the Enverus Daily Count of active North American drilling rigs has now fallen by 20%. Baker Hughes BHI said Friday its own weekly rig count has dropped six straight weeks. One week could be a blip; two straight might be a coincidence; but six straight weeks is definitely a trend.

Given the state of other market factors, it’s a trend that seems unlikely to reverse itself during the second half of 2023, despite continuing forecasts of better times ahead from some analysts and agencies.

What are those other factors? Let’s look at a few:

It is key to remember that most of the larger shale producers went through the process of deciding their 2nd half 2023 capital and drilling budgets during April and May, when oil and natural gas prices hovered in the same low range we see today. Thus, these budgets, which kick in on July 1, are almost certain to be lower than the 1st half 2023 budgets, which were determined last October/November amid commodity prices that were considerably higher and expectations that favored a strong Chinese recovery.

Despite these bearish factors conspiring to imply a further slow-down in U.S. drilling during the 2nd half of the year, the U.S. Energy Information Administration (EIA) raised its domestic oil production forecast for 2023 from an average of 12.5 million barrels of oil per day (bopd) to 12.6 million bopd this week. Even with steadily-improving per-well recoveries, technology advances and efficiency gains, this forecast seems unlikely to be met as the number of active rigs continues to decline.

Even if global demand should suddenly begin to recover strongly during the 2nd half of the year, factors would mitigate against shale producers suddenly jumping back into a drilling boom in response.

First, OPEC+ has now cut so deeply into its daily exports that several member countries, most notably Saudi Arabia and the United Arab Emirates, now have millions of barrels per day in spare capacity. The national oil companies in those countries would be able to respond far more rapidly to rising commodity prices than the hundreds of U.S. shale producers would be able to collectively do.

Second, the bureaucratic inertia inside the corporate shale producers makes the raising of drilling budgets in response to short-term price increases difficult to accomplish. In many companies, a request for a significant increase in capital allocated to drilling would require approval from the board of directors, and many executives are reluctant to seek such approval unless they feel certain rising prices are more of a long-term trend.

What it all means is that America’s shale business is slowing down for now. Whether this is a short-term blip or about to become a longer-term trend depends on factors that are beyond the control of company executives or anyone in the U.S. government.