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U.S. crude oil production increases following higher drilling activity (2/15/2017)

U.S. crude oil production increased for the second consecutive month in November 2016, the first consecutive monthly increase since April 2015. Increased drilling activity in the Permian in Texas and New Mexico as well as the start of a number of new projects in the Federal Offshore Gulf of Mexico (GOM) more than offset declining production from other regions in the fourth quarter of 2016 (Figure 1). In the Permian, increases in the West Texas Intermediate (WTI) crude oil price, up from averaging near $30 per barrel (b) in the first quarter of 2016 to $45/b or higher beginning in the second quarter of 2016, contributed to new drilling. In the GOM, the projects that came online were sanctioned during the 2012-14 period. Current crude oil prices above $50/b, combined with increasing rig counts in other onshore basins, suggest U.S. crude oil production will likely continue to increase. …

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