U.S. crude oil production is set to remain close to its current levels of around 11 million barrels per day (bpd) through the end of 2021, as new drilling activity will not be enough to offset declines from existing wells, the Energy Information Administration (EIA) said on Tuesday.
Crude oil production in the United States hit a record 12.9 million bpd in November last year. As of March this year, when oil prices collapsed with the pandemic and the Saudi-Russian price war, American crude oil output averaged 12.7 million bpd.
Over the next two months, U.S. producers curtailed more than 2.5 million bpd of oil production due to the low oil prices, which were well below break-even prices for most of the onshore shale producing regions. By May 2020, U.S. crude oil production had slipped to 10.0 million bpd, the lowest level since January 2018, according to EIA data.
By July, U.S. producers had restored part of the previously shut-in production as oil prices largely stabilized in a narrow range of around $40 per barrel.
U.S. crude oil output was 11 million bpd in July, and 10.6 million bpd in August, with the August production disrupted by shut-ins in the U.S. Gulf of Mexico because of hurricanes.
This month, U.S. oil production is expected at 11.2 million bpd, the EIA estimated in its November Short-Term Energy Outlook (STEO) last week.
By the second quarter of 2021, production will likely decline to an average of 11.0 million bpd as new drilling activity will not generate enough production to offset declines from existing wells.
However, drilling activity is set to pick up in the latter half of 2021, supported by expected higher oil prices, with U.S. crude oil production reaching 11.3 million bpd in the fourth quarter of 2021. On an annual average basis, EIA expects crude oil production to decline from 12.2 million bpd in 2019 to 11.4 million bpd this year and 11.1 million bpd in 2021.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More