U.S. oil production could break an all-time high of 10 million barrels per day by the end of the year, according to a new report.
Analysts at Rystad Energy are predicting U.S. crude oil output could top an old record set in November 1970 by the end of the year. Production is currently growing at 95,000 barrels per day per month this year, largely thanks to hydraulic fracturing into shale formations.
“US oil production has grown faster at 50 USD than any analysts in the market predicted,” Bjørnar Tonhaugen, Rystad’s vice president of oil markets, said in a statement.
There’s been modest crude output growth in the Gulf of Mexico, but that production mostly offsets declines seen in conventional oil fields, according to Rystad.
But where traditional oil fields have failed, fracking has succeeded.
Fracking has become more efficient and productive, and is responsible for virtually all the increase in oil and gas production in recent years.
Analysts predict U.S. crude oil could rise even faster as prices increase. OPEC and Russia agreed to extend production cuts another nine months in an effort to keep prices above $50 a barrel.
The Energy Information Administration (EIA) expects “crude oil production is forecast to average 9.3 million b/d in 2017 and almost 10.0 million b/d in 2018.” Prices are expected to stay above $50 a barrel.
OPEC and Russia initially agreed to production cuts in late 2016, but decided to extend those cuts another nine months at a meeting in Vienna last month.
“As these numbers are getting confirmed, the initial optimism about OPEC’s temporary cuts, may turn to increasing skepticism about OPEC’s choice of policy once the current output deal expires next year,“ Tonhaugen said.
The U.S. nearly broke oil production records in April 2015 when output hit 9.6 million barrels a day. Production fell about 1 million barrels per day over the next year and a half as oil prices collapsed.
Crude prices fell from over $100 per barrel in summer 2014 to under $40 a barrel in early 2016. The price has since come up to above around $50 per barrel.
Rystad predicts U.S. oil production to come roaring back, hitting 9.4 million barrels a day in May. EIA’s data shows March’s production was at 9.1 million barrels a day and expects it to hit 9.7 million barrels a day in December.