USA Oil and Gas Production Growth to Accelerate

USA Oil and Gas Production Growth to Accelerate
U.S. oil and gas production growth is forecasted to accelerate this year.

U.S. oil and gas production growth will accelerate in 2022.

That’s according to Enverus Intelligence Research’s latest FundamentalEdge report, which outlined that oil output growth would rise above around 900,000 barrels per day and gas output growth would rise above around four billion cubic feet per day.  

Supply chain headwinds defer some of this growth until the second half of the year as the rig count rises modestly, the report highlighted. The report forecasts that the rig count will peak at around 660 late in the first quarter, from around 640 today.

“For both commodities, we expect this strong U.S. production growth to bring prices down relative to current strip levels, although geopolitical tensions and OPEC outages present upside risk to Brent and WTI,” Enverus Intelligence Research noted in a statement sent to Rigzone.

“As prices weaken and base declines accelerate, U.S. production growth decelerates in 2023, to [around] 300,000 barrels per day and [around] one billion cubic feet per day, and rig counts moderate to [around] 560,” the statement added.

According to the report, robust North American supply growth along with seasonal demand weakening should trigger a global crude and product inventories build in the first half of this year. This build will pull oil prices into the mid-$70s during the same time period, Enverus Intelligence Research projected, adding that it believes OPEC will manage supply to maintain around a $70 per barrel Brent price floor for the medium term.

“If prices fall below that level for a sustained period, we expect the cartel will manage production to maintain price in the mid-$70s for the medium term,” Enverus Intelligence Research said in the statement.

U.S. crude oil production reached almost 11.8 million barrels per day in November 2021, according to the U.S. Energy Information Administration’s (EIA) latest short term energy outlook (STEO), which was released on February 8.

The EIA, which highlighted that was the most production in any month since April 2020, forecasted in its latest STEO that output will rise to an average of 12 million barrels per day in 2022 and 12.6 million barrels per day in 2023. This would be record-high production on an annual-average basis, according to the EIA, which noted that the previous annual average record of 12.3 million barrels per day was set in 2019.

Earlier this month, Standard Chartered highlighted that a surge in U.S. oil output in the fourth quarter of 2021 had gone largely unnoticed by the oil market and oil analysts. According to data published in a Standard Chartered research note sent to Rigzone at the time, the U.S. added over 900,000 barrels per day to supply in the second half of last year. Only Saudi Arabia produced more and the U.S. comfortably outperformed countries such as Russia, Canada, Iraq, Norway, the UAE and the UK, the data showed.

To contact the author, email andreas.exarheas@rigzone.com


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