Crude oil production in the Permian has climbed closer to pre-pandemic levels, according to the latest drilling productivity report of the Energy Information Administration.
According to the report, oil production in the Permian stood at 4.826 million bpd this month and will rise to 4.888 million bpd in November. The October average is already higher than the average for February 2020, which stood at 4.816 million bpd.
With the price of U.S. crude at over $80 per barrel for the first time in years, shale oil production is finally picking up. Although large public companies are still reluctant to boost output in any significant way lest they anger their cash-return-eager shareholders, smaller, private producers are ramping up to take advantage of the higher prices.
“It’s a win for the privates without being a loss for the oil markets,” Raoul LeBlanc, an analyst at IHS Markit, told Bloomberg earlier this month. “The big takeaway is that private growth won’t ruin the party.”
The recovery in the Permian will push total U.S. oil production higher as well. OPEC expects the U.S. to add some 800,000 bpd to global production, although “uncertainty regarding the financial and operational aspects of US production remains high,” the cartel said in its monthly report last week.
The EIA currently sees U.S. oil production averaging 11.0 million bpd this year, and rising to 11.7 million bpd in 2022. That’s 700,000 bpd growth on average for next year.
Overall, America’s production growth next year is expected to be modest, especially compared to the surges in output in 2018 and 2019, which led to a record U.S. oil production of 13 million bpd in February 2020, just before the pandemic crippled demand and crashed oil prices.
Currently, West Texas Intermediate is trading above $82 per barrel and Brent crude earlier this month topped $85 per barrel.