The largest monthly drop in U.S. crude oil production in more than a decade in July is likely a temporary, geographically isolated glitch largely due to Gulf of Mexico shut-ins due to Hurricane Barry, the EIA said on Wednesday, expecting that U.S. crude oil production will return to grow month on month throughout the rest of this year.
According to the EIA’s most recent Petroleum Supply Monthly, U.S. crude oil production dipped in July by 276,000 barrels per day (bpd) from June. This was the largest decline in monthly crude oil production in more than a decade. This production drop was temporary and geographically constrained to the U.S. Gulf of Mexico area, where operators shut in production and evacuated platforms ahead of the expected passing of Hurricane Barry, according to EIA.
The Federal Offshore Gulf of Mexico saw its crude oil production plunge by 332,000 bpd in July, the EIA data showed.
Oil and gas producers shut in as much as 73 percent of the oil production in the Gulf as Barry passed through the area.
In the October Short-Term Energy Outlook, EIA expects that U.S. crude oil production will increase in each of the remaining months of 2019, and reach 13.0 million bpd in December 2019. This year’s U.S. crude oil production is forecast to average 12.3 million bpd, while the 2020 production is seen averaging 13.2 million bpd.
Although production is expected to have picked up from the July dip, the EIA acknowledged that the slowing rate of growth in shale production reflects relatively flat crude oil prices and slowing growth in well-level productivity.
The growth rate is set to level off in 2020, due to lower oil prices in the first half of the year and continuing declines in well-level productivity, the EIA says.
Meanwhile, the U.S. shale patch is bracing for an extended period of weak oil prices, and drillers and oilfield services firms are cutting staff and reducing budgets to weather the slowdown in North America’s fracking growth.
By Tsvetana Paraskova for Oilprice.com
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