Data out last week has confirmed that US oil production continues to edge higher to a new all time high in August, despite falling rig numbers.
Crude and condensate production in the month of August reached 13.053 million barrels a day, up from 12.959 million barrels a day in July.
Output was up nearly 9% from the same month in 2022 when it totalled 11.895 million barrels a day.
The news slipped past oil traders who again pushed oil prices lower – US West Texas Intermediate crude dropped 1.9% on Friday to close the week at $80,89, for a weekly loss of 5% while Brent crude lost more than 4% for the week to end at $US85.23.
But August’s output topped the previous peak of 13 million barrels a day in November 2019, three months before the pandemic hit demand and production.
That means the US is now clearly the biggest producer globally, with Saudi Arabia and Russia curbing production each month (by a total of 1.3 million barrels a day, bpd) to try and support prices.
Saudi Arabia recently said it would maintain its unilateral crude production cut of 1.0 million bpd through December. The move will hold Saudi Arabia’s crude output at about 9 million bpd, the lowest level in three years. Russia also recently announced that it would maintain its 300,000 bpd cut in crude production through December.
Analysts say companies are getting more from each well despite a fall in the number of rigs employed, with the industry boosting efficiency to offset the impact of higher costs and uncertain prices.
Output from the Lower 48 states excluding federal waters in the Gulf of Mexico increased to a record 10.8 million barrels a day, according to the US Energy Information Administration’s (EIA) monthly supply report. Gulf of Mexico wells produced nearly 1.9 million barrels a day in August, up 7.4% from August, 2022.
More than 5.6 million barrels a day came from Texas and especially the shale areas of the Permian Basin in August and July of this year That was up around 600,000 barrels a day from August 2022.
Lower 48 output was up by 955,000 b/d (or 10%) compared with a year earlier, though growth slowed modestly to 210,000 b/d (annualised growth of 8%) in the most recent three months from May to August.
Production has continued rising even though prices have retreated from the highs reached in the middle of 2022 in the immediate aftermath of Russia’s invasion of Ukraine.
Inflation-adjusted US crude futures prices averaged $US71 per barrel in June 2023, down from a peak of $US121 in June 2022.
The EIA says WTI futures prices increased to an average of $US89 a barrel in September and dipped to $US85 last month.
The rise in production has come as an average of just 501 rigs drilling for oil last month across the US, down 20% from 623 at the end of 2022.
Last week there was another fall – down 8 according to Baker Hughes to 496, the lowest since January, 2022. Baker Hughes said that puts the total rig count down 151 rigs, or 20% from this time last year.
But US and Brent crude futures prices are now down to levels not seen since the final weeks of August, meaning all the post October 7 premium from the Hamas attacks and Israel counter attacks, has vanished from the market.
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Gold prices edged higher late on Friday to finish the week 10 cents under $US2,000 an ounce.
The Comex front month futures prices actually climbed over the $US2,000 level to $US2,010 an ounce in the session.
The $US1,999.90 close left the price down 0.81% for the week. But it’s up more than 9% for the year to date and over 18% in the past 12 months.
Comex copper settled $US3.68 a pound, up 0.81% for the week.
Singapore iron ore rose by around 4% in another solid week with the SGX futures price ending at $US122.85 a tonne, the highest close in more than a year as the hard to understand run up in iron ore prices continued.
Going the other way, the SGX futures price for premium Australian coking coal fell to $US316.33 a tonne on Friday, down $US15 a tonne or around 5% over the week.