Concerns over the ability for U.S. shale-oil production to offset efforts by other oil producers to rebalance the market have been greatly exaggerated.

The energy industry is already suffering from the impact of spending cuts over the past several years, said Phil Flynn, senior market analyst at Price Futures Group, in a webinar held Tuesday afternoon.

“We’re losing investment in the energy industry,” he said. “It’s taking its toll.”

Global energy exploration and production capital expenditures are expected to fall by 22%, or $740 billion, between 2015 and 2020, he said, citing a report from Wood Mackenzie issued last year. Including cuts to conventional exploration investment, Wood Mackenzie said that figure increases to just over $1 trillion.

Discovery of new oil fields has already “plunged” to its lowest level since 1947, as exploration companies cut back in the wake of the drop in oil prices, Flynn said. Year to date, West Texas Intermediate crude US:CLQ7 and Brent crude UK:LCOQ7 prices have dropped by roughly 18%.

EIA

Shale-oil production is climbing, but that growth is slowing down, said Flynn. He pointed out that while the number of U.S. rigs drilling for oil has grown for 23 weeks in a row, based on Baker Hughes US:BHI data, new-well oil production per rig among the shale plays has slowed.

A crash in shale-oil production is “starting now,” Flynn told MarketWatch in an email. “It will become more clear in a few months.”

Oil production from seven major U.S. shale plays is expected to see a monthly rise of 127,000 barrels per day, to 5.475 million barrels a day in July, according to the Energy Information Administration. The EIA has forecast increases each month of this year so far.

But the latest data show a rise in the number of drilled-but-uncompleted shale wells — up by 176 to 5,946 in May from a month earlier, EIA data show.

The figures also show that new-well oil production per rig among the major U.S. oil plays was expected to rise by just 1 barrel per day, to 719 in July, from a month earlier.

The market is seeing signs that production for shale oil is slowing, and it may slow “a lot more dramatically” than people think, said Flynn.

With members of the Organization of the Petroleum Exporting Countries strongly sticking to their pledged production cuts and with record refining demand for oil in the U.S., the amount of oil in domestic storage is on track to drop by 100 million barrels by the end of September — ”regardless of shale,” said Flynn.

Given all of that, he expects that prices for oil during the second half of the year will “rebound and take out the 2017 highs.”

The year-to-date high for WTI was seen in February at $54.45 a barrel.