U.S. oil production hits another record high

U.S. oil production surged to another record high this week and is quickly approaching 11 million barrels a day, according to a report from the U.S. Energy Information Administration.

Fueled by the shale oil boom, U.S. production continues to soar, despite an industry that is still recovering from the deepest downturn in 30 years and a new focus on efficiency rather than boosting production at all costs.

The country’s oil production hit 10.9 million barrels a day last week, up from 8.42 million barrels in July 2016 and less than 5 million barrels a day a decade ago.

Rising U.S. oil in the first half of the decade helped flood the global market and send prices tumbling. But just a few years later, global markets increasingly are tightening, making U.S. production more important internationally.

The Organization of Petroleum Exporting Countries meeting later this month likely will feature discussion about whether to continue the 1.8 million barrels per day reduction put in place along with Russia in late 2016 to help prevent oil prices from falling deeper than the 14-year lows they already had reached.

OPEC members have far outpaced their goals, cutting production by more than 2.8 million barrels in May, according to the International Energy Agency.

The production cut has been led by Venezuela, which has seen its output slashed in recent years because of its own internal political turmoil. Venezuela’s production has tumbled to about 500,000 barrels a day, down from about 2.5 million barrels a day a few years ago.

President Donald Trump twice recently has tweeted that OPEC artificially is holding prices too high because of reduced output, and there is growing speculation that the cartel will consider changing its quotas when the group meets June 22. It is unclear, however, how much OPEC production could increase.

Saudi Arabia and Iran likely could grow their output if they want, but it’s unlikely that Venezuela and other member countries could significantly increase production.

OPEC’s situation — along with steadily growing global oil demand — creates opportunity for U.S. producers. Despite a much narrower focus on drilling activity, the country’s top producers are reporting strong production gains.

The Permian Basin in west Texas and southeast New Mexico is by far the country’s most active oil field, representing about 45 percent of the country’s active drilling rigs and about a quarter of total U.S. production.

IHS Markit analyst Daniel Yergin this week projected Permian production to double to about 5.4 million barrels a day by 2023.

In Oklahoma, production was about 542,000 barrels a day in March, up from about 404,000 barrels a day in December 2015. Oklahoma’s STACK and SCOOP fields are a few years behind Permian production, and the Oklahoma fields are much smaller. But production here is likely to increase over the next several years as companies move beyond testing and into the full development phase.