Drilling activity in the US oil and gas output increased by 51.3pc on an average yearly basis in 2022, driving crude production up to 11.9mn bl/d and marking a 6.4pc increase compared with the 11.2mn bl/d averaged in 2021. The increased output was augmented by US companies completing a large backlog of drilled-but-uncompleted (Duc) wells in two major oil shale basins.
WTI started 2022 at $83.22/bl and climbed steadily throughout the year, despite rising interest rates, fears of economic recession, and restricted Russian supply caused by the war in Ukraine. Crude prices hit a 15-year high in June 2022, at $114.84/bl, before falling back down and ending the year at $76.44/bl.
In 2024, we forecast that crude oil production in the Permian will increase by 350,000 b/d, while production in the GOM declines slightly. We forecast that production in other U.S. crude oil-producing regions increases by 70,000 b/d in 2024.
We forecast the U.S. benchmark West Texas Intermediate (WTI) crude oil price will average $77 per barrel (b) in 2023 and $72/b in 2024, down from $95/b in 2022. Despite declining crude oil prices, we expect the WTI price will remain high enough to support crude oil production growth, especially in the Permian, where data from the Dallas Fed Energy Survey indicate that average breakeven prices range from $50/b to $54/b.
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Source: PE Media Network
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