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US oil production on track for new heights

The US Energy Information Administration has released its figure for July’s oil production, reaching almost 11 million barrels per day (bpd). This is a 2.5% month-on-month (m-o-m) increase and an 18.8% increase on the same month last year.

The biggest m-o-m increase was seen in the federal waters of the Gulf of Mexico, an area where ExxonMobil, the oil major behind Mobil stockists, has committed itself to investing $20bn over the coming decade. Production jumped by 189,000 bpd (11.4%) in July.

Texas remains the single-largest oil-producing region, but the 1% m-o-m increase would seem to indicate that limited takeaway capacity is starting to bottleneck the prolific Permian Basin, where shale operators have largely driven the resurgence in US oil production. This is expected to stall production from the basin for the rest of the year, with more growth expected in the second half of 2019 as takeaway constraints are alleviated.

Total US oil production was distorted a little by a 56,000 bpd reduction in Alaska due to seasonal maintenance. Were it not for this, US oil production would have already exceeded the 11 million bpd milestone. Nevertheless, the country is on track to reach a production level of 11.25 million bpd by the year’s end.

While one may expect this to position the US as the world’s top oil producer, Russia is already pumping around 11.3 million bpd according to an unnamed official speaking to Bloomberg, with further spare capacity available if the agreement with OPEC and its other partners is modified.

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