US oil production grows so fast that an all-time high of 10 million barrels per day could be reached before December 31st this year, Rystad Energy predicts.
In a monthly report on latest oil market trends, Rystad Energy analysts show US oil production growing at 95 kbbld per month during 2017. The growth stems from shale drilling, as the more modest growth from Gulf of Mexico deepwater fields is offsetting declines from other US conventional oilfields.
The historic record of 10 million barrels per day was reached during November, 1970, when US oil prices were still below 3 USD. The record was close to being surpassed in 2015 when US production peaked in April at 9.6 million barrels. Production then dropped 1 million barrels per day over 18 months as oil prices fell from above 100 to below 40 USD. Based on proprietary and detailed well level data, Rystad Energy sees current US production bouncing back twice as fast as it dropped, reaching 9.4 million barrels on May 31st. And, this very steep growth comes with US oil prices locked below the price most analysts estimated as a minimum to grow US oil production. The US Energy Information Administration released its latest official data for March at 9.1 million barrels per day. Rystad Energy believes this implies another upward revision of the EIA’s official oil production outlook for the US, which is now at 9.74 million barrels for December 2017.
“US oil production has grown faster at 50 USD than any analysts in the market predicted. As these numbers are getting confirmed, the initial optimism about OPEC’s temporary cuts, may turn to increasing skepticism about OPEC’s choice of policy once the current output deal expires next year,” said Bjørnar Tonhaugen, VP Oil Markets at Rystad Energy.