U.S. Total Oil Output Poised To Set New 2019
Record, By Rystad Energy, 06/6/19.
US oil production keeps accelerating towards new highs. New
records are expected both when the final numbers for May emerge and at the end
of the year.
Rystad Energy is raising its forecast for US crude output to 13.4
million barrels per day (bpd) by December 2019. For May 2019, our research and
calculations point to crude oil production averaging 12.5 million bpd. Both are
new all-time highs.
“Our US supply projections have been revised up yet again. US oil
production is already higher than many in the market believe,” says Bjørnar
Tonhaugen, Head of Oil Market Research at Rystad Energy.
Preliminary
US well production data shows that tight oil production alone reached
pre-winter levels of around 8.5 million bpd in May. This prompted an upward
revision of our 2019 US total production exit rate by approximately 200,000
bpd, to 13.4 million bpd. We also revise our 2020 exit rate to 14.3 million bpd,
up by approximately 75,000 bpd.
“Strong
growth persists in the Permian Basin on both the New Mexico and the Texas
sides. Updated production estimates suggest that the Permian Basin surpassed
4.5 million bpd in May. Considering the ongoing recovery in fracking activity,
Rystad Energy maintains its previous expectation that Texas production will
exceed 5 million bpd at some point during the second quarter of 2019,”
Tonhaugen added.
We see
production in the Gulf of Mexico reaching 1.95 million bpd by the end of 2019,
up by 135,000 bpd since our last update, partly thanks to the early start-up of
Shell’s Appomattox field.
Oil prices - Rystad Energy expects crude
oil prices to stay flat in the near term. “The oil market is again in a
tug-of-war situation with downwards pressure currently dominating. Downside
pressures exist from weak demand and fear of economic growth degradation,
partially induced from protectionist policies in the US and partially from
structural forces, as exemplified by Chinese PMIs showing a dip again in May,”
Tonhaugen remarked.
OPEC production - Rystad Energy estimates OPEC
crude oil production of 29.9 million bpd for May, the lowest monthly output
level in more than five years and an astonishing 2.6 million bpd below October
2018 reference levels. For 2019 as a whole, we forecast OPEC crude production
of 30.3 million bpd, down 1.6 million bpd year-on-year. We also lower our
projections for Saudi Arabia to around 10.3 million bpd, from 10.6 previously.
“We continue
to expect OPEC production to increase through the remainder of 2019, but risks
to short-term supply are undoubtedly still plentiful, with a total of 1.3
million bpd at risk from Iran, Venezuela, Libya and Nigeria,” Tonhaugen said.
Comments
The price of oil
increases when inventory levels decline and it decreases when inventory levels
rise. The US still needs its pipeline system to be extended to handle increased
production. The US consumes 20 million bpd and is expanding production to meet
and exceed its usage to achieve energy independence and reduce its trade
deficit.
Norb Leahy, Dunwoody
GA Tea Party Leader
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