US Oil Supply in November 2013

Source: OPEC 11/21/2013, Location: North America

US oil supply is estimated to increase by 1.02 mb/d in 2013 to average 11.06 mb/d, indicating an upward revision of 70 tb/d compared to the previous month. The current expected growth for the US in 2013 is the highest on record for the nation and the highest among all non-OPEC countries for 2013. The projection for US supply growth in 2013 is currently exceeding the increase achieved in 2012. The third and fourth quarter supply experienced the majority of the upward revisions to adjust for updated production data that continued to show a strong increase, as well as a few changes to output expectations. Additionally, historical data revisions to 2012 supply affected the figures for 2013. Tight oil developments are seen as the main driver of the strong growth that has been achieved so far and that is expected to continue through 2013 in Texas, North Dakota and other locations. Furthermore, new NGL capacity further supported the expected growth in US supply in 2013.

North Dakota’s supply reached a new record average of 910 tb/d in August, representing an increase of 35 tb/d over the previous month. The new record that broke the 900 tb/d level for North Dakota production in August came after just three months of output breaking the 800 tb/d level in May. This strong growth was driven by increased drilling efficiency and well productivity.

The same factor supported Texas oil production in August, which averaged 2.68 mb/d. Eagle Ford production is seen as the main driver of Texas oil supply growth, which indicated an increase of 50% compared to the same month a year earlier. Bakken and Eagle Ford production is seen as responsible for around 75% of the US supply growth so far achieved. NGL production is expected to further support output in 2013 as more operators are focusing on wet gas wells to improve gas production economics.

On the other hand, the impact on Gulf of Mexico production from tropical storm Karen, which caused various shutdowns for a short period, impacted the outlook. According to preliminary data, US supply increased by 1.39 mb/d in the third quarter, compared to the same period a year ago. On a quarterly basis, US oil supply in 2013 is seen to average 10.65 mb/d, 10.96 mb/d, 11.32 mb/d and 11.33 mb/d, respectively.

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