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US production highest since March 1988 Brent averaged $110 per barrel in May, the 11th consecutive month it was in $107-$112/barrel range; WTI averaged $102 in May Kristen Nelson Petroleum News
U.S. crude oil production averaged almost 8.4 million barrels per day in May, the highest monthly average since March 1988, the U.S. Energy Information Administration said in its June 10 Short-Term Energy Outlook.
“U.S. crude oil production in May increased to the highest output for any month in 26 years and is on track next year to reach the highest annual production level since 1972,” EIA Administrator Adam Sieminski said in a statement.
U.S. crude production averaged 7.4 million bpd in 2013, is expected to average 8.4 million bpd this year and 9.3 million bpd in 2015, EIA said.
U.S. production growth is part of a projected non-OPEC increase which reached 1.4 million bpd in 2013 and is expected to be 1.5 million this year and 1.2 million bpd in 2015. In 2013 non-OPEC production averaged 54.1 million bpd.
EIA is projecting that production in the U.S. and Canada will grow by a combined average of 1.4 million bpd this year and 1.2 million bpd in 2015.
Production from the Organization of the Petroleum Exporting Countries averaged 29.9 million bpd in 2013, down 1 million bpd from 2012, and is expected to fall by 100,000 bpd this year and an additional 100,000 bpd in 2015 “to accommodate growing production in non-OPEC countries.”
Brent at $110 The spot price for North Sea Brent crude oil was $110 per barrel in May, up from $108 in April, EIA said, the 11th consecutive month in which the average Brent spot price was in the $107-$112 per barrel range.
The discount of West Texas Intermediate to Brent averaged $7 per barrel in May, up from below $4 per barrel in April. The discount averaged more than $13 per barrel from November through January.
EIA said it is projecting Brent to average $108 per barrel this year and $102 in 2015, with the WTI discount averaging $9 per barrel this year and $11 per barrel in 2015.
WTI averaged $102 per barrel in both April and May, up from an average of $95 in January. EIA said the January startup of TransCanada’s Marketlink pipeline, “moving crude oil from Cushing to the Gulf Coast, and strong refinery runs” contributed to the WTI price rise.
Inventory levels at the Cushing, Oklahoma, storage hub dropped from 41 million barrels Jan. 3 to fewer than 22 million barrels at the end of May, the agency said, the lowest level since November 2008.
High seasonal demand for refined products and strong refinery runs are expected to help keep the discount of WTI to Brent at about $7 per barrel over the next few months, EIA said, with the discount expected to widen later in the year and reach $12 in December.
Natural gas averaged $4.58 per million Btu at the Henry Hub in May, down 8 cents from April, EIA said. The agency expects Henry Hub to average $4.74 per million Btu this year and $4.49 in 2015.
Marketed production of natural hit a record high of 72.7 billion cubic feet per day in March, the agency said, up 1.5 percent from February.
Total marketed production averaged 70.2 bcf per day in 2013 and is projected to average 73 bcf per day this year and 74 bcf per day in 2015.
New infrastructure projects are expected to support Marcellus formation production growth, which is largely driving overall production increases, the agency said. The rapid growth in Marcellus production is contributing to falling forward prices for natural gas in the Northeast, with those prices often falling below Henry Hub outside of peak winter demand months. EIA said this may result in some drilling moving from the Marcellus back to Gulf Coast plays where prices are closer to Henry Hub.
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