About half of the 400,000 BPD production increase since summer comes from the Permian Basin. Production there continues to grow, albeit at the slowest pace in three years.
One indicator of where U.S. oil production may be headed comes from rig count data, which now shows a 22% decline since last November. On the other hand, the inventory of wells that have been drilled but not yet completed (DUCs) remains near all-time highs at around 8,000 wells. That means there could be a significant lag between the decline in the drilling rig count, and an actual decline in oil production.
Meanwhile, crude oil inventories in the U.S. remain right in the middle of the 5-year average level. These inventories are one of the strongest drivers of crude oil prices, and as long as they are where they are, it will probably be hard to make a bullish case for crude oil prices.