U.S. crude oil production in each of the first five months of 2019 increased over 2018 levels, with April 2019 establishing a new monthly record, the Energy Information Administration reports.
Crude production averaged nearly 12.2 million barrels per day (Mmbpd) in April, an increase of 1.7 Mmbpd compared with April 2018, Kallanish Energy reports.
EIA reported production in May was 12.1 Mmbpd, only slightly below April’s record high. EIA forecasts U.S. production will continue to grow and will reach 13.6 Mmbpd in December 2020.
The Permian Basin in West Texas/southeast New Mexico accounts for the largest share of total U.S. crude oil production growth, and EIA in July forecast year-over-year growth in the Permian of nearly 1.0 Mmbpd in 2019, and 0.7 Mmbpd in 2020.
The Gulf of Mexico accounts for the second-largest volume of growth, according to EIA, and is expected to grow 0.2 Mmbpd in 2019, and 0.1 Mmbpd in 2020.
Several factors have contributed to increases in the U.S. production forecast. First, crude oil prices began rising in early 2019, partially offsetting the price drop seen at the end of 2018.
In addition, crude oil prices in Midland, Texas (which reflect crude oil prices in the Permian), rose faster than the U.S. benchmark West Texas Intermediate, which is priced in Cushing, Oklahoma (a major storage and distribution hub).
As a result, the price spread between Midland and Cushing narrowed, allowing producers in the Permian to receive relatively better prices.
Several projects have also come online in the Gulf this year, boosting production. EIA forecasts U.S. production will grow through 2020, but anticipates growth will slow in 2020 as crude oil prices flatten.
This post appeared first on Kallanish Energy News.