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Published by Sally Ismail
Direct: One of the most important issues in the global oil markets is the production of crude oil in the United States.
According to a report by Oil Price, OPEC wants to know when the start of oil production in the United States will experience a downward trend.
The return of the US oil boom over the last decade has reduced OPEC's share of world crude oil markets.
In less than eight years, oil production in the United States has grown from less than 6 million bpd to more than 12 million bpd.
This is probably the only reason why oil prices have not exceeded 100 dollars a barrel yet.
Growth in US oil production from 2005 to 2019
It seems that OPEC's current strategy is to wait for US production to start declining before regaining control of the oil markets.
The Organization of Petroleum Exporting Countries may not have to wait too long.
The Permian Basin has experienced slower growth in oil production in the United States, the largest crude oil producing area in the United States, but it is not the only one.
While the recovery in US oil production was concentrated in shale oil, offshore production in the United States also made a big leap forward.
Over the past decade, oil production on the US Gulf Coast has increased from 1.2 million barrels per day to about 2 million barrels per day.
Looking at the following chart, it looks like production could start moving towards the end of the period.
In fact, the US Energy Information Administration has announced a slight downward trend in US oil production since May.
The key question is whether this situation is an anomaly or the beginning of a lasting trend.
Applying the same badysis as that applied to production in the Permian Basin – which examined changes in production on an annual basis – it became clear that US oil production growth was slowing more rapidly than that in the United States. Permian.
Evolution of US oil production on an annual basis
The graph below shows that growth in US oil production has slowed since January due to the acceleration of the pace recorded in recent months.
Production growth is very rapidly trending downward and if the decline continues at the current rate, oil production growth may drop to zero before the end of this year (output will decline instead of growth).
The sharp drop is due to the interruption of production at sea before hurricanes in Bari, according to the latest report from the US Energy Information Administration.
But even baduming a slower rate of decline than a year ago, growth in US output seems to be back to zero in one year.
Once growth has fallen below zero, US output has dropped from one year to the next.
It is difficult to say whether the current decline will be permanent.
It should be noted that the year 2015 has seen a similar decline, but that this trend has reversed in 2017, oil prices returning from a level of 30 dollars a barrel to more than 50 dollars a barrel.
It is unlikely that the current downturn will see the same turnaround as the previous decline is the result of sharp reductions in capital spending as the price of oil fell from $ 100 per barrel to less than $ 30 per barrel.
The current drop in oil production in the United States occurs during a period of declining oil prices.
In any case, the only thing that can stop the current slowdown is a rise in oil prices from their current levels.
Without a slowdown in this slowdown, overall US oil production is expected to trend downward by one year, perhaps by the end of the year.
This is the result that OPEC hopes to achieve.
Clearly, OPEC's strategy is to maintain support for oil prices until US oil production begins to drop to a point where it can reaffirm control of global oil markets.
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