US oil production has sustained its upward climb, underscoring nervousness about excess supply that has unraveled the market for crude. The record 11.475m barrels per day that oil companies pumped in September were 1.98m b/d higher than in September 2017, the US government said on Friday. That was the second biggest annualized increase on record, after August this year.
The latest monthly snapshot is of particular interest as Opec and allied producers meet next week to weigh curbs on their output. US supply has increased at the same time as volumes from Saudi Arabia and Russia, energy giants that have co-ordinated on oil policy for the past two years. “The production surge is not a new story, but this [data] emphasizes it, and it puts even more pressure on the Saudis to lead an ‘Opec-plus’ cut next week,” said Michael Wittner, oil analyst at Société Générale.
“If they needed a reminder, boom — they just got one.” US supplies alone are growing faster than global oil consumption, which the International Energy Agency estimates at an annual rate of about 1.3m b/d. Producers want to avoid building up the kind of surplus that pushed oil prices as low as $30 a barrel in early 2016. On Friday, the price of West Texas Intermediate, the US benchmark, was trading 0.6 percent lower at $51.12 a barrel. Brent, the international benchmark, lost 1.3 percent to $58.74 a barrel.
In Texas, the center of the US shale drilling industry, oil production averaged 4.7m b/d in September, up by a third from the same month a year before, the data from the US Energy Information Administration showed. In North Dakota production was 1.3m b/d, up 22 percent on the year. The increases came even as pipeline bottlenecks depressed local oil prices in regions such as the Permian basin of Texas and New Mexico.