I have noted in recent articles that U.S. oil production is presently at about the same level it was 10 months ago. In August 2023, the U.S. produced 13.0 million BPD of crude oil. That gradually rose to 13.3 million BPD by the end of 2023 but has since declined back to 13.1 million BPD.
In a recent TikTok video, I pointed this out and one commenter asked “How can this be if we are producing more oil than ever?” The confusion is understandable, so I will explain here how two things can be true: The U.S. will probably set an annual production record this year, but U.S. production growth is flat.
Regarding the latter, Rystad Energy, a Norwegian independent research and energy intelligence company, concurs. In a report released earlier this month, Rystad said “US shale remains a trustworthy source of growth, though less elastic to price changes and more consolidated after continued rounds of mergers and acquisitions. This reduces the short-term upside potential for a surprise in U.S. growth.”
The Rystad report further added that it expects near-zero global oil supply growth this year following the latest news from OPEC+ and that this would mark the first year since 2020 that this has happened.
If production growth remains flat for the rest of the year, how can the U.S. set a new annual production record in 2024? The reason is that 2023 began with production around 12.5 million barrels per day (BPD). Production gradually rose during the year to a peak of 13.3 million BPD in the last two months of 2023, but the average for the entire year was 12.9 million BPD.
In 2024, production has been above 13 million BPD in every month but January. The year-to-date average for 2024 has been about 13.1 million BPD — 200,000 BPD above the annual average set in 2023. Thus, even if there is zero production growth for the rest of 2024 — in fact, even if production declines slightly — the U.S. will set a new oil production record this year.
The only way this won’t happen is if U.S. production declines sharply in the second half of the year. There are no projections suggesting that this is likely, so — as I predicted in January — the U.S. should set a new oil production record this year.
However, it looks less likely that this will happen again in 2025.
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