U.S. crude output is on track to set a record this year, up 9% from April, helping to keep energy prices steady and revealing efforts by Saudi Arabia and other oil exporters to boost them.
The The Energy Information Administration has forecast that total US production will reach 12.61 million barrels per day in 2023, topping 2019’s record of 12.32 million barrels per day and easily beating last year’s 11.89 million barrels per day.
OPEC and its allies have announced cuts this year amounting to ~6% of 2022 output, but Rystad Energy estimates production in non-OPEC countries will account for about two-thirds of the reductions, and crude oil prices have fallen 13% YTD.
Half of the new crude oil comes from the USA, according to The Wall Street Journalwhere several companies including ConocoPhillips (COP), Devon Energy (DVN), EOG Resources (NYSE:EOG) and Pioneer Natural Resources ( PXD ) delivered strong Q1 production.
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Companies’ efforts to improve efficiency have given them a greater ability to remain profitable even as oil prices fall, and improvements since 2014 have cut the cost of drilling and fracking in US shale by 36%, according to JP Morgan.
The increased efficiency means that EOG, for example, can make as much from oil priced at $42/barrel today as it would have from $86/barrel oil in 2014; meanwhile, the budget of Saudi Arabia’s government reportedly requires ~$81/bbl of oil.
American manufacturers continue to seek ways to improve efficiency; Exxon Mobil ( XOM ) CEO Darren Woods has said the industry is still recovering only ~10% of the oil it theoretically could from the Permian Basin.
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