US oil output surge keeps pressure on Opec, allies

Country tops Russia as biggest producer for second month

US oil production surged to a new record in September, adding more pressure on Opec and its allies to cut supply at this week’s meeting.

American drillers pumped 11.47 million barrels a day, the US Energy Information Administration said, eclipsing Russia for a second month as the world’s biggest producer. That exceeded weekly estimates by 428,000 barrels a day, the second time in as many months that the agency revised its preliminary data sharply higher.

The US output surge will weigh heavily in discussions this weekend at the G20 summit as well as at this week’s meeting of Opec and its allies.

Choices

Saudi Arabia in particular faces a difficult choice: whether to cut production and support prices that have fallen to $50 a barrel, at the risk of angering US President Donald Trump.

Russia’s Vladimir Putin and Saudi Arabia’s Mohammad Bin Salman may discuss

oil supplies at the summit in Argentina. An Opec advisory committee suggested a 1.3 million barrel-a-day cut from October levels, according to a

delegate. Analysts surveyed by Bloomberg expect producers will announce some cuts, despite protests from Trump.

Production increased 1.1 per cent from August and 21 per cent a year ago, led by Texas, North Dakota and Alaska, countered by a drop in Gulf of Mexico output. The revision is likely to result in upward adjustments in weekly data and the EIA’s outlook for next year’s production.

America’s supply growth, while helping to lower gasoline prices for consumers, is bound to hurt domestic producers as the industry grapples with transportation bottlenecks until more pipeline capacity is added later next year.

Analysts are already expecting shale explorers to cut spending budgets next year as prices spiral lower.

Daily output cut suggested by Opec advisory committee