The COVID pandemic had in a wide-ranging impact on commodity production as global demand contracted. As of March 2020, US crude oil production had reached a record high of more than 13 million barrels per day (bpd), but by the end of June output had fallen to 11 million. It ultimately fell to 10.7 million by the end of September. As weather issues led to well shut-ins, there were some weeks in August and October that it fell below 10 million bpd.
From early November through mid-May, production stayed mostly within a tight range between 10.9 and 11.1 million bpd, which was only interrupted by the Texas/New Mexico freeze in February. After a mild reduction in late May, US production finally climbed above that range with this week’s reading of 11.2 million bpd. This was still well below the record highs from last year, but it was the highest reading since late May, 2020.
Baker Hughes produces a weekly report that compiles a total of operating oil and gas drilling rigs for the US and Canada. The US oil rig count reached a peak of 1,609 rigs by October 2014. But as crude oil prices fell from triple-digit levels, the US rig count dropped as well, and it has not climbed above 900 rigs since. The pandemic exacerbated the decline, sending the count to a 15-year low of 172 rigs last August.
Since the pandemic low, the oil rig count has gradually increased. This week’s Baker Hughes report showed a total of 373 US oil rigs as of June 18. While that is a fraction of the record from 2014, it is more than double the count from August. The Permian basin continues to hold the lion’s share of rigs with 237, while the Eagle Ford basin has 31, the Williston (Bakken) basin 17, and the Cana Woodford basin 15.
During this period of relatively steady US production, crude oil prices have risen from $42 a barrel in November to $72 this week. This week’s EIA report showed US crude oil stocks at 466.7 million barrels as of June 11, a 15-week low and nearly 25 million barrels below the 5-year average. US crude oil throughput to refineries reached a 15-month high. While it may not return to record levels, US crude oil production may be set to increase over the next few months.
Originally Posted on June 18, 2021
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