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 13.4mn barrels per day (bpd) by December 2019. For May 2019, our research and calculations point to crude oil production averaging 12.5mn 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 8.5mn bpd in May. This prompted an upward revision of our 2019 US total production exit rate by approximately 200,000 bpd, to 13.4mn bpd. We also revise our 2020 exit rate to 14.3mn 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 4.5mn bpd in May. Considering the ongoing recovery in fracking activity, Rystad Energy maintains its previous expectation that Texas production will exceed 5mn bpd at some point during the second quarter of 2019,” Tonhaugen added.
We see production in the Gulf of Mexico reaching 1.95mn 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, the independent energy research and consulting firm in Norway with offices across the globe, 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 29.9mn bpd for May, the lowest monthly output level in more than five years and an astonishing 2.6mn bpd below October 2018 reference levels. For 2019 as a whole, we forecast OPEC crude production of 30.3mn bpd, down 1.6mn bpd year-on-year. We also lower our projections for Saudi Arabia to around 10.3mn 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 1.3mn bpd at risk from Iran, Venezuela, Libya and Nigeria,” Tonhaugen said.
