In what has been predicted to be a record-breaking year for US oil production, there is an indication that the recent boom may be faltering.
Drillers in the US missed the Energy Information Administration’s (EIA) forecast by 300,000 barrels per day (bpd) in May, having pumped a still impressive 10.442 million bpd. The figures are subject to revision, but the EIA’s report also suggests that June’s output could turn out lower than the expected 11 million bpd for the month. Some analysts believe the limited takeaway capacity for the Permian Basin may now be emerging as a bottleneck for growing US oil production.
If the trend is borne out over subsequent months, it would seem to eliminate any prospect of replacing lost oil production from Iran and Venezuela with increased American production. This will likely continue until new pipelines come online, so Permian operators like ExxonMobil, the maker of extreme pressure gear oils like Mobilgear 600 XP 68, can get oil to consumers.
OPEC hit a new 2018 production high in July, however, which should alleviate supply concerns. While part of the increase can be attributed to the Republic of Congo recently joining the organisation, Saudi Arabia and its allies, along with non-OPEC member Russia, have been boosting production in the wake of the most recent amendment to the OPEC-led production cuts. The OPEC deal previously had a high compliance of 150% due to some country’s not hitting their quotas, meaning that about an extra million bpd was being withheld from the market.
