U.S. oil and condensate production snapped back by 230,000 barrels per day (bbl/d) in October, the latest month for which official statistics are available, the International Energy Agency (IEA) said in a Jan. 19 report.

The report underscores the strength of the U.S. tight oil industry, particularly as prices have remained above $50/ bbl.

E&Ps in the Lower 48 averaged more than 8.8 MMbbl/d, up 106 Mbbl/d from the prior month. Production in Alaska and the U.S. Gulf of Mexico (GoM) also rose.

“As we turn the page on 2016, it is … becoming clear that the U.S. shale industry is coming out of the downturn fitter than initially anticipated,” the IEA said in its Oil Market Report.

In 2016 production declined by 545,000 bbl/d, including tight oil production of 280,000 bbl/d—largely due to higher productivity rates and more efficient operations, the agency said.

Tight oil production in North Dakota led gains, followed by Oklahoma, Texas and New Mexico. However, North Dakota’s oil production is expected to dip below 1 MMbbl/d by the end of January due to winter conditions and low oil prices, state regulators said Jan. 13.

Overall U.S. crude production is down 820,000 bbl/d from its April 2015 peak but still 300,000 bbl/d higher than anticipated, IEA said.

“U.S. shale-oil production will definitely react strongly,” IEA executive director Fatih Birol told Bloomberg Television. At $56 to $57 a barrel, “a lot of shale plays in the United States would make perfect sense to produce.”

Strong fourth-quarter 2016 demand helped lift estimated 2016 global growth to 1.5 MMbbl/d, about 100,000 bbl/d higher but still below the IEA’s five-year growth peak of 2 MMbbl/d seen in 2015.

In 2017, the IEA predicted demand will be sapped by a stronger U.S. dollar and potentially higher product prices. Demand growth may slow to about 1.3 MMbbl/d.

Oil production is expected to increase by 170,000 bbl/d.

“We remain a bit more optimistic about demand growth with our expectation of an increase of 1.5 MMbbl/d,” said Roger D. Read, an analyst at Wells Fargo Securities.

The IEA also noted that OPEC is complying with its announced production cuts, but Read said it’s “too early to be definitive on the level of compliance.”

An alliance of OPEC and non-OPEC countries—chiefly Russia—agreed to cut oil production levels, resulting in a spike in prices. In early December 2016, Brent prices ranged from $53/ bbl to $57/ bbl.

Whether OPEC sticks to its quotas should determine the first half of 2017’s volumes, Read said. Wells Fargo’s take is that OPEC compliance will be roughly 60%.

“We assume strong compliance early on, led by Saudi Arabia, with a weakening in compliance as the year progresses,” he said. “Recent indications from the Saudis that the cuts will not extend beyond six months could put a cap on oil prices after mid-year.”

Following the recent bounce in output and support by higher prices, the U.S. shale patch is expected to see increased activity. U.S. total oil production is forecast to rise 320,000 bbl/d to 12.8 Mbbl/d in 2017.

In December, U.S. producers brought back 48 rigs to service, the highest monthly addition since April 2014.

A Barclays survey estimates E&P spending will increase 26.5% this year following two years of double-digit decline.

North American independents are expected to raise capex by 58.5%.

Spending “reflects not only increased activity, but also expected cost inflation–with pressure pumping and land drilling costs seen as rising most,” the IEA said.

Increased rig count trails increases in production by four to five months.

“Our shale production forecast assumes the number of wells completed this year to increase by 26% compared with the 2016 total, with more substantial growth expected in 2018,” IEA said. “Most of the gains will come from the Permian Basin, where producers are currently focusing their efforts. Output from Bakken and Eagle Ford is expected to continue to lag year earlier levels in the near term.”

Darren Barbee can be reached at dbarbee@hartenergy.com.