According to recent data from the US Energy Information Administration, the production of crude and condensate in the United States surpassed pre-pandemic levels in August.
Total production for the US stood at 13.1 million barrels per day (bpd) in August compared to the previous record of 13.0 million bpd in November 2019. This was just before the COVID-19 pandemic started suppressing the demand for oil, and sent prices tumbling.
What is surprising is that production continued to increase despite the inflation-adjusted price of crude futures declining from $121 per barrel in June last year, to $71 in June this year. The number of active rigs has also fallen from 623 in December last year to 501 in October this year.
Shale operators like Chevron, the maker of Texaco Meropa gear oil, are generating greater production out of each well by focusing fewer rigs on the most favourable sites and drilling longer lateral wells. This increases the amount of contact that the well has with the reservoir rock, thus increasing productivity overall.
With Saudi Arabia and Russia having announced sizeable production and export cuts on top of the existing OPEC+ cuts, oil prices have risen again recently, offering a lifeline to operators with higher breakeven costs. This has caused the decline in rig numbers to halt for the first time this year.
Should oil prices remain above $80 per barrel, it’s likely that US production will continue at the same level, or rise slightly through 2024.