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US Leads Global Oil and Gas Production, US Drillers Cut Rigs Again and 1.4 Million BBL Decrease

The U.S. has overtaken Saudi Arabia and Russia to become the world's largest oil and gas producer. In 2024, America's oil output has surpassed last year's record by 1.4%, reaching new heights. Even as oil-producing countries in the Middle East cut back, the U.S. continued to ramp up production after a downturn in 2020, establishing itself as a dominant force in the global market.

In terms of numbers, U.S. oil production jumped from an average of 2.93 million barrels per day in 2023 to 13.12 million barrels per day in 2024, marking a significant 7.1% increase.

Natural gas production in the U.S. also showed robust growth. It rose from 124.6 billion cubic feet per day last year to 125.9 billion cubic feet per day in 2024, an increase of 1.1% in just twelve months.

Rextag consistently monitors and compiles data on Natural Gas. Discover detailed insights in our exclusive ‘American Gas Data & Map Book’.

Oil and Gas Rigs Cut

This week, U.S. energy companies reduced the number of oil and natural gas rigs for the third consecutive week. The total number of oil and gas rigs fell by two to 603, marking the lowest count since January 2022. This decline reflects an 18% decrease compared to the same period last year.

The number of oil rigs dropped by three to 496, reaching their lowest point since last November. However, there was a slight increase in gas rigs, which went up by one to 103. In Texas, the number of active rigs decreased by three, bringing the total to 289—the lowest since February 2022, yet still the highest count of any state. New Mexico follows with 109 rigs.

The overall decline in rig count by about 20% in 2023, after a rise of 33% in 2022 and 67% in 2021, was influenced by falling oil and gas prices, increased costs for labor and equipment due to inflation, and companies prioritizing debt repayment and shareholder returns over boosting production.

Meanwhile, U.S. oil futures have risen about 9% so far in 2024 after a decline of 11% in 2023. However, gas futures have decreased by about 10% in 2024 following a 44% drop in the previous year.

Despite these challenges, Occidental Petroleum announced plans to increase oil production in the Permian Basin in the second half of 2024, aiming to achieve more with fewer rigs thanks to efficiency improvements. The U.S. government has slightly lowered its production outlook for 2024 to 13.2 million barrels per day, up from 12.9 million in 2023, and anticipates an increase to 13.7 million barrels per day in 2025.

Due to the significant drop in gas prices to 3-1/2-year lows earlier this year, many producers are cutting budgets and scaling back on drilling, which is expected to reduce U.S. gas production to 103.0 billion cubic feet per day in 2024 from a record 103.8 billion in 2023, as per the EIA.

1.4 Million BBL Decrease

For the week ending May 3, 2024, U.S. crude oil inventories, excluding those in the Strategic Petroleum Reserve, fell by 1.4 million barrels from the previous week.

The EIA report also noted changes in other petroleum products. Total motor gasoline inventories rose by 900,000 barrels last week, remaining roughly 2% below the five-year average. Both finished gasoline and blending components inventories saw increases. Distillate fuel inventories, which include diesel and heating oil, went up by 600,000 barrels, yet they are still about 7% below the five-year average. Propane-propylene inventories experienced a significant increase, rising by 2.2 million barrels and standing 13% above the five-year average.

On the production side, U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week, up by 307,000 barrels per day from the week prior, with refineries operating at 88.5% of their capacity. Gasoline production increased, averaging 9.5 million barrels per day, and distillate fuel production also rose, averaging 4.8 million barrels per day.

In terms of imports, U.S. crude oil imports averaged 7.0 million barrels per day, up by 198,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged 6.7 million barrels per day, an 8.4% increase compared to the same period last year. Motor gasoline imports averaged 719,000 barrels per day, and distillate fuel imports averaged 111,000 barrels per day.

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Significant Rise in U.S. Crude Oil and Gasoline Inventory Levels

This week, the American Petroleum Institute (API) reported that U.S. crude oil stocks increased by 7.168 million barrels, ending February 16. This rise exceeded analysts' expectations of a 4.298 million barrel increase. Last week, the API noted an 8.52 million barrel jump in crude inventories.

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