/US oil production surges to new record

US oil production surges to new record

US oil production has sustained its upward climb, underscoring nervousness about excess supply that has unravelled the market for crude.

The record 11.475m barrels per day that oil companies pumped in September was 1.98m b/d higher than in September 2017, the US government said on Friday. That was the second biggest annualised 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] emphasises 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 per cent lower at $51.12 a barrel. Brent, the international benchmark, lost 1.3 per cent to $58.74 a barrel.

In Texas, the centre 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 per cent 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.

US oil prices have declined by a third from a recent peak in October. That has led to speculation that shale operators will curtail drilling in the face of diminished profits. However, the number of horizontal drilling rigs in the US rose by five to 934 this week, according to Baker Hughes, the oilfield services company.

Saudi Arabia faces pressure from US president Donald Trump to sustain supply levels in spite of slumping oil prices. Mohammed bin Salman, the Saudi crown prince, Russian president Vladimir Putin and Mr Trump are among the leaders at the G20 summit convened on Friday in Buenos Aires.