The Moment Of Truth Is Here For US Oil Production
Matterhorn is finally here. All eyes on US oil production.
Since late last year, we have been pounding the table on the fact that associated gas production has disconnected from crude production growth in the Permian.
We’ve written many follow-ups since then with this being the latest one.
(Public) An Alarming Trend Is Developing In US Shale Oil Production (Part 3)
Editor’s Note: This article was first published to subscribers on Oct 1, 2024.
Fast forwarding to today, it’s finally put up or shut up for US oil producers. Many of the oil commentators seem to suggest that the lack of natural gas takeaway capacity has been one of the key limiting factors to crude production growth this year. With oil capex H2 weighted, we should start to see a meaningful response in US oil production.
As Matterhorn gets underway (currently around ~1.1 Bcf/d out of ~2.5 Bcf/d), we have already seen a tick higher in US oil production.
Our base case view is that US oil production will exit the year around ~13.4 million b/d up from ~13.2 million b/d today. For this week’s EIA crude storage estimate, we assumed a ~100k b/d increase. While the relationship between associated gas production growth to crude production has disconnected, we are not delusional enough to believe that crude production won’t increase.