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Essential Energy Insights, April 2021


US crude oil, natural gas production flattened in April amid big YOY jump

Production of crude oil and natural gas across the U.S. began to level in April after several months of rapid gains as natural gas production stands more than 10% higher year on year and crude oil output is up almost 15% year on year and on pace to break all-time highs this year.

The U.S. Energy Information Administration's latest "Monthly Crude Oil and Natural Gas Production" report released June 29 showed gross oil production at 10.47 million barrels per day, mostly flat month on month and up 14.6% on the year.

North Dakota saw the biggest increase in oil production in April, rising 61,000 barrels per day to almost 1.21 MMbbl/d, while production from the Gulf of Mexico saw the biggest drop, declining 98,000 bbl/d to 1.58 MMbbl/d.

Analysts with Barclays highlighted that lower output from the Gulf of Mexico and Alaska more than offset the increase in tight oil production from Texas, New Mexico and North Dakota, where production reached its highest level since December 2014.

"The pause in [month-on-month] production growth is likely transitory and we expect the growth in output to resume in the balance of the year," Barclays analyst Michael Cohen wrote in a July 2 note to clients.

U.S. crude oil production is on pace to reach its highest levels ever recorded. According to the latest Short-Term Energy Outlook released June 12, U.S. crude oil production will average 10.8 MMbbl/d in 2018, which would mark the highest annual average U.S. crude oil production level, surpassing the previous record of 9.6 MMbbl/d set in 1970.

The EIA forecasts that 2019 crude oil production will continue to rise to an average of 11.8 MMbbl/d.

The latest monthly production report showed gross withdrawals of natural gas were up 0.1 Bcf/d, or 0.1%, from the month prior to an average near 98.51 Bcf/d, up 10.2% year on year.

Total U.S. natural gas production, as measured by the EIA as "gross withdrawals," includes the natural gas liquids present in "wet" gas as well as nonhydrocarbon gases and any gas delivered as royalty payments or consumed in field operations.

Texas saw natural gas production increase by a little more than 0.2 Bcf/d month on month, while output in the Gulf of Mexico was down a little more than 0.2 Bcf/d.